CANADA FX DEBT-C$ lower as BoC warnings on strength linger

Fri Oct 23, 2009 7:55am EDT
 
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 * C$ falls to overnight low of C$1.0535 to the US$
 * Bond prices pinned lower across the curve
 By Frank Pingue
 TORONTO, Oct 23 (Reuters) - The Canadian dollar fell versus
the U.S. greenback on Friday as another warning from the Bank
of Canada in the previous session that the currency's rally is
a risk to growth continued to weigh on sentiment.
 The central bank said earlier this week a surging Canadian
currency was undermining Canada's economic recovery, which
killed thoughts of an early interest rate hike and raised some
concerns the bank might signal it would intervene in foreign
exchange markets.
 On Thursday, Governor Mark Carney said in a news conference
that intervention in currency markets was an option but also
stressed the bank's main concern was controlling inflation.
[ID:nN22502163]
 The comments sent Canada's dollar to a slightly lower close
on Thursday, and the sentiment carried on through the overnight
session where the currency fell as low as C$1.0535 to the U.S.
dollar, or 94.92 U.S. cents.
 "It's definitely underperforming against most of the
crosses," said David Bradley, director of foreign exchange
trading at Scotia Capital in Toronto. "Just a follow through
from the comments made by Carney and the Bank of Canada over
the last couple of days."
 Bradley also said the Canadian dollar would have to rally
through its 2007 high when it topped US$1.10 to convince the
Bank of Canada to intervene.
 At 7:40 a.m. (1140 GMT), the Canadian unit was at C$1.0530
to the U.S. dollar, or 94.97 U.S. cents, down from C$1.0478 to
the U.S. dollar, or 95.44 U.S. cents, at Thursday's close.
 Domestic bond prices, with no Canadian data to influence a
move, were pinned lower across the curve alongside the bigger
U.S. Treasury as overseas equities rallied and sapped demand
for more secure government debt.
 (Editing by Padraic Cassidy)