CANADA FX DEBT-C$ rises on weak U.S. outlook

Wed Dec 24, 2008 9:42am EST
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 * Canada dollar rises 0.1 percent
 * U.S. dollar weaker on grim U.S. outlook
 * Bond prices little changed
 By Cameron French
 TORONTO, Dec 24 (Reuters) - The Canadian dollar edged
higher versus the U.S. currency on Wednesday morning as the
greenback eased on concerns about the strength of the U.S.
economy, while better-than-expected Canadian economic data had
little impact on trading.
 Canadian bond prices were mixed and fairly flat ahead of an
early market close of 1 p.m. (1800 GMT).
 At 9:30 a.m., the currency was at C$1.2129 to the U.S.
dollar, or 82.45 U.S. cents, up from C$1.2146 to the U.S.
dollar, or 82.33 U.S. cents, at Tuesday's close.
 The U.S. dollar fell against most major currencies as data
on unemployment, spending and durable goods orders underscored
the grim outlook for the U.S. economy.
 In contrast, Canada's economy shrank by 0.1 percent in
October from September, beating expectations of a 0.3 percent
decline. The Statistics Canada figures had little impact on the
currency, however.
 "What I think is going on is continuing concern about he
U.S. dollar," said David Watt, senior currency strategist at
RBC Capital Markets.
 With volumes thinned out ahead of the Christmas holidays,
currency moves have been muted and responded mainly to year-end
portfolio adjustments and corporate volumes, Watt said.
 Market players are largely in a wait-and-see mode as
January will bring an expected stimulus package in Canada's
federal budget, the inauguration of U.S. President-elect Barack
Obama, and an interest rate decision and Monetary Policy Report
Update by the Bank of Canada.
 Bond prices were split, resisting the urge to follow
stronger U.S. Treasuries, which rose on the grim U.S. economic
 While Canada's economy is now believed to be in recession,
the country has not experienced real estate and financial
services meltdowns anywhere close to those in the United
 The two-year bond rose 1 Canadian cent to C$102.92 to yield
1.207 percent. The 10-year bond slid 10 Canadian cents to
C$111.75 to yield 2.820 percent.
 The yield spread between the two-year and 10-year bond was
at 161 basis points, up from 159 at the previous close.
 The 30-year bond fell 15 Canadian cents to C$126.90 to
yield 3.498 percent. In the United States, the 30-year Treasury
yielded 2.633 percent.
 (Reporting by Cameron French; editing by Peter Galloway)