CANADA FX DEBT-C$ slides with oil, stocks

Thu Sep 24, 2009 11:46am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

 * C$ falls to 92.10 U.S. cents
 * Oil prices, equities retreat
 * Bonds mixed after latest U.S. data
 * G20 meeting in focus
 * Central banks cut back emergency lending facilities
 TORONTO, Sept 24 (Reuters) - The Canadian dollar fell to
its lowest level in more than a week against a broadly stronger
U.S. currency on Thursday, hit by a drop in oil prices and
equity markets, and as some central banks pared back emergency
lending facilities.
 Major central banks, including the U.S. Federal Reserve,
announced they were scaling back some of their monetary
stimulus measures [ID:nN24448204]. The move followed the Bank
of Canada's announcement it would scrap two special lending
facilities at the end of next month because of "improved
conditions" [ID:nN22363926].
 At 11:25 a.m. (1525 GMT), the Canadian currency was at
C$1.0858 to the U.S. dollar, or 92.10 U.S. cents, down from
C$1.0751 to the U.S. dollar, or 93.01 U.S. cents, at
Wednesday's close.
 "It's been a sharp and sudden move. The Canadian dollar is
not the absolute laggard but it's right down there," said Eric
Lascelles, chief economics and rates strategist at TD
Securities.
 "Certainly, liquidity operations are falling off but I
don't see why Canada would be disproportionately affected in
that."
 While the Canadian dollar was hit, its decline was not as
steep as sterling's, which extended losses against the euro and
the U.S. dollar after Bank of England Governor Mervyn King told
a British newspaper that a weaker pound was helping cushion the
British economy's downturn. [ID:nN24445524]
 The news came just ahead of the Group of 20 meeting on
Thursday in Pittsburgh. Among major issues expected to be
discussed will be the need to examine strategies for
withdrawing economic stimulus measures as well as global
imbalances. [ID:nLH78576]
 Helping to accelerate the Canadian dollar's fall was a
further drop in the price of oil to below $67 a barrel, while
North American stocks turned lower after a mildly higher open.
The Canadian dollar often tracks the direction of equity and
resource prices as a reflection of risk appetite.
 "It will really be a mix of reaction to equity markets,
commodity markets. The markets will be very keen to understand
what the G20 has got to say about global imbalances," said Jack
Spitz, managing director of foreign exchange at National Bank
Financial.
 The Canadian dollar is expected by many analysts to be
choppy but within a well-defined range until it can sustain a
break beyond the high last week at C$1.0591 to the U.S. dollar,
or weaken beyond C$1.11, the mid-July low.
 BONDS NARROWLY MIXED
 Canadian bond prices were mixed on Thursday, with
short-dated issues lower and longer issues edging up as
investors absorbed lower-than-expected U.S. weekly jobless
claims and home sales data.
 The two-year bond CA2YT=RR was off 3 Canadian cents at
C$99.45 to yield 1.293 percent, while the 10-year bond
CA10YT=RR fell 13 Canadian cents to C$102.62 to yield 3.429
percent. The 30-year bond CA30YT=RR gained 15 Canadian cents
to C$118.15 to yield 3.919 percent.
 Canadian bonds mostly underperformed their U.S.
counterparts.
 (Reporting by Ka Yan Ng; editing by Rob Wilson)