CANADA FX DEBT-Short-covering lifts C$ after steep selloff

Thu Nov 24, 2011 8:50am EST
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 * C$ at C$1.0462 to the US$, or 95.58 U.S. cents
  * Canada bond prices ease across the curve
  * German bond yields hit highest in month
  By Claire Sibonney
 TORONTO, Nov 24 (Reuters) -  The Canadian dollar recovered
slightly against its U.S. counterpart on Thursday as investors
took profits on the sharp U.S. dollar rally in the previous
session on fears the euro zone crisis was spreading to
 The Canadian dollar also skidded to a seven-week low
against the U.S. currency on Wednesday after a weak German bond
auction rang alarm bells about Europe's biggest economy.
 "(Short covering) was the core story across a lot of
currency pairs through Asia and through the London session this
morning that we saw profit taking generally on the big (U.S.)
dollar rally that came through pretty much in parallel against
all the majors yesterday and took dollar/Canada with it," said
Adam Cole, global head of FX strategy at RBC Capital Markets in
 "We've seen a partial reversal of that today. Again that's
carried dollar/Canada with it rather than anything
Canadian-dollar specific."
 Still, more weakness was expected for riskier assets after
German government bond yields hit their highest in nearly a
month on Thursday. [MKTS/GLOB]
 At 8:46 a.m. (1346 GMT), the Canadian currency CAD=D4
stood at C$1.0462 to the U.S. dollar, or 95.58 U.S. cents, up
from Wednesday's North American session close at C$1.0485
against the greenback, or 95.37 U.S. cents.
 The Canadian dollar came within striking distance to C$1.05
on Wednesday, a level still seen as support, but remained
vulnerable amid thin liquidity due to the Thanksgiving holiday
in the United States.
 "It would be too soon to say the worst is over today
particularly as markets are very thin with the U.S. closed and
likely to stay that way for the rest of the week," added Cole.
  Canadian government bond prices eased across the curve,
underperforming rising U.S. Treasuries, pushing benchmark
yields  to the lowest in seven weeks. [US/]
 Canada's two-year bond CA2YT=RR fell 2 Canadian cents to
yield 0.904 percent and the 10-year bond CA10YT=RR dropped 18
Canadian cents to yield 2.060 percent. On Wednesday, the
10-year bond hit a low not reached in Bank of Canada records
going back to 1951.
   (Reporting by Claire Sibonney, editing by W Simon )
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Canadian dollar and bonds report....[CAD/][CA/]
TSX market report..........[.TO]
Canadian interest rate poll.......... [CA/POLL]
Reuters monthly Canadian dollar poll.[CAD/POLL]
Reuters G7 quarterly economy poll.......ECONPOLL1 [ECILT/CA]
Reuters global stocks poll (Canada)...EQUITYPOLL1 [EPOLL/CA]
Weekly economic data poll..............[ECI/CA]
Bank of Canada T-bill auction..........[CA/BIL]
Bank of Canada securities auctions.....[CA/AUC]
Top News: Canada ......[TOP/CAN]
Today in Canada.......[CA/DIARY]
Global markets report.............[MKTS/GLOB]
Foreign exchange........[FRX/]
US Treasuries........... [US/]
Real-time Canadian economic RICS.......ECONCA
Canadian dollar quote............CAD=CAD=D3
Canadian bonds quote..<0#CABMK=>
Canadian money market quote.........<0#CAMMKT=>
Canada-Treasury spread rates........<CA/SPREAD>
Canadian speed guide....CANADA