CANADA FX DEBT-C$ falls as growth concerns weigh

Thu Jun 24, 2010 8:02am EDT
 
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 * C$ lower at 95.87 U.S. cents
 * Bond prices firmer, follows U.S. Treasuries
 By Jennifer Kwan
 TORONTO, June 24 (Reuters) - The Canadian dollar edged
lower against its U.S. counterpart on Thursday, pressured by
weaker oil and global equities on concerns about economic
growth after the U.S. Federal Reserve issued a pessimistic
outlook.
 The U.S. central bank acknowledged a faltering pace of U.S.
economic recovery on Wednesday as it renewed its vow to hold
benchmark interest rates exceptionally low for an extended
period. [ID:nN22150078]
 "The backdrop still remains extremely dicey," said David
Watt, senior currency strategist at RBC Capital Markets.
 "Central banks are starting to ... express some very
notable concern about the situation, and that is getting a lot
of people rethinking rate profiles for central banks."
 At 7:50 a.m. (1150 GMT), Canada's dollar was at C$1.0431 to
the U.S. dollar, or 95.87 U.S. cents, down from Wednesday's
finish at C$1.0384 to the U.S. dollar, or 96.30 U.S. cents.
 The U.S. central bank's assessment, which helped to push
world stocks and oil prices lower [MKTS/GLOB] [O/R], followed a
pair of soft economic reports that triggered a sharp fall in
the Canadian dollar the day before.
 On Wednesday, the currency touched a low of C$1.0461 to the
U.S. dollar, or 95.59 U.S. cents, its weakest level since June
9.
 Watt said the 200-day moving average of C$1.0433 to the
U.S. dollar is a key technical level.
 "If we hold below it we can maybe have more hope that the
optimistic growth scenarios will unfold. If we start going
above then we start worrying whether or not we're in another
period of risk aversion and worrying about global economic
growth," he said.
 With no domestic economic data to speak of, Canadian
government bond prices followed the path of U.S. Treasuries,
where yields dropped following the Fed announcement and on
broader concerns about euro zone debt troubles. [US/]
 The two-year Canadian government bond CA2YT=RR was up 9
Canadian cents to yield 1.563 percent, while the 10-year bond
CA10YT=RR rose 30 Canadian cents to yield 3.198 percent.
 (Editing by Padraic Cassidy)