CANADA FX DEBT-C$ hits 3-week low, but oil gives some support

Fri Sep 25, 2009 6:00pm EDT
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 * C$ comes off three-week low, ends at 91.60 U.S. cents
 * Falls for third straight session, down 2 pct on week
 * Bond prices head higher on weak stocks
 (Updates to close)
 TORONTO, Sept 25 (Reuters) - Canada's currency fell to its
lowest against the U.S. dollar in three weeks before recovering
slightly on Friday, as further signs of U.S. economic weakness
were partly offset by a jump in oil prices.
 Weakening for a third day in a row, the Canadian dollar
finished at C$1.0917 to the U.S. dollar, or 91.60 U.S. cents,
down from C$1.0890 to the U.S. dollar, or 91.83 U.S. cents, at
Thursday's close.
 It had dropped as low as 91.05 U.S. cents, its lowest since
Sept. 4, after U.S. economic data showed new orders for durable
goods fell unexpectedly in August. [ID:nN25493668] Evidence of
U.S. economic weakness often hurts the Canadian dollar because
of Canada's reliance on trade with the United States.
 A slump in oil prices weighed on the currency earlier in
the session but as the commodity steadied above $66 a barrel
helped the Canadian dollar narrow its decline.
 Oil prices rose slightly after U.S. President Barack Obama
accused Iran, an OPEC member, of building a secret nuclear fuel
plant. [O/R]
 Canada is a major oil exporter and its currency often moves
in line with prices for the commodity. Meanwhile, stocks also
managed to struggle back from session lows. [.TO]
 The Canadian dollar has flagged since midweek when the U.S.
Federal Reserve said U.S. economic recovery is under way and
central banks said they will pare injections of dollar
 The Canadian currency headed lower on Thursday when it
pushed through the C$1.0864 barrier on high volume, said George
Davis, chief technical analyst at RBC Capital Markets.
 "Sentiment is changing vis-a-vis Canada," he said. "I think
the bias will be for a weaker Canadian dollar into next week
based on what's taken place over the last three days."
 The currency's recent weakness could take the threat of
central bank intervention off the table for the time being,
Davis added.
 In an interview published on Thursday, Bank of Canada
Governor Mark Carney said the central bank may resort to
unorthodox policies if it believes the rising Canadian dollar
poses a threat to its inflation target. [ID:nN24475596]
 With no major domestic data readings on Friday, Canadian
bond prices headed higher on the weakness in equity markets.
 The two-year bond CA2YT=RR was off 2 Canadian cents at
C$99.48 to yield 1.269 percent, while the 10-year bond
CA10YT=RR gained 30 Canadian cents to C$103.18 to yield 3.361
 The 30-year bond CA30YT=RR was up 40 Canadian cents at
C$118.85 to yield 3.882 percent.
 (Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)