CANADA FX DEBT-C$ hovers near parity but Greece weighs

Tue Apr 27, 2010 8:16am EDT
 
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 * C$ at C$1.0030 or 99.70 U.S. cents
 * Bonds slightly higher across the curve
 By Claire Sibonney
 TORONTO, April 27 (Reuters) - The Canadian dollar slipped
just below parity against its U.S. counterpart on Tuesday,
weighed down by lingering uncertainty over the euro zone's
fiscal health, which hit risk-related currencies and assets
such as oil and equities.
 World stocks remained troubled by worries over Greece's
debt after Germany demanded new austerity measures, offsetting
strong U.S. earnings, and driving up the safe-haven U.S. dollar
on contagion fears. [MKTS/GLOB]
 In addition, oil slipped toward $83 a barrel, pulled lower
by nagging concerns that Greece's economic trauma could have
knock-on effects on the wider economy and demand for fuel.
[O/R]
 "All in all the biggest factor is what's transpiring in
Europe and risk aversion," said Camilla Sutton, currency
strategist at Scotia Capital.
 "Should that settle down we'll see a stronger CAD and if it
doesn't we'll see CAD weaken off further."
 At 7:53 a.m. (1153 GMT), the Canadian dollar CAD= was at
C$1.0030, or 99.70 U.S. cents, down from Monday's finish at
C$1.0014 to the U.S. dollar, or 99.86 U.S. cents. Earlier, the
currency hit a high of exactly C$1 to the U.S. dollar.
 "The market is just trying to feel out where we're going to
go from here and most of it has to do with risk aversion,"
added Sutton.
 She said the day's key resistance level to spur buying of
the Canadian currency is yesterday's high of C$0.9971, or
$1.0029.
 Selling pressure is eyed at the 21-day moving average of
C$1.0049, or 99.51 U.S. cents.
 "We made a brief attempt at there earlier today but
failed."
 Currency markets will also be focused on a parliamentary
appearance by Bank of Canada Governor Mark Carney later in the
day and an interest rate decision by the U.S. Federal Reserve
on Wednesday.
 In its Wednesday announcement, the U.S. central bank's
Federal Open Market Committee (FOMC) is expected to hold rates
near zero and repeat its vow to maintain an extended period of
low rates, but investors remained wary. [ID:nN2298630]
 Canada's central bank surprised markets last week by
dropping its conditional pledge to keep its key rate at its
current low level of 0.25 percent to the end of June, sending
the Canadian dollar and domestic bond yields higher.
[ID:nN20257669]
 Currencies usually strengthen as interest rates rise as
higher rates attract capital flows.
 Canadian bond prices were slightly higher across the curve,
following U.S. Treasuries which rose as investors expect steady
interest rates in the world's biggest economy. [US/]
 The two-year Canadian government bond CA2YT=RR was up
half a Canadian cent at C$99.15 to yield 1.973 percent, while
the 10-year bond CA10YT=RR was up 14 Canadian cents to
C$100.70 to yield 3.659 percent.
 (Reporting by Claire Sibonney; Editing by Chizu Nomiyama)