CANADA FX DEBT-C$ weakens ahead of federal budget

Tue Jan 27, 2009 10:20am EST
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* C$ weaker after rising four straight sessions

* Market awaits federal budget at 4 p.m. (2100 GMT)

* Bonds mixed, follow U.S. Treasuries

By Jennifer Kwan

TORONTO, Jan 27 (Reuters) - The Canadian dollar weakened versus the U.S. currency on Tuesday, as the price of oil and other commodities slipped and the market braced for a federal budget expected to include stimulus measures to boost the economy.

The weakness comes after four straight sessions of strength versus the greenback on largely firmer commodity prices and easing risk aversion.

Canadian bond prices were mixed on Tuesday, making some gains at the long end after recent pressure due to persistent concern about swelling supply.

At 9:31 a.m. (1431 GMT), the Canadian dollar was at C$1.2290 to the U.S. dollar, or 81.37 U.S. cents, down from C$1.2241 to the U.S. dollar, or 81.69 U.S. cents, on Monday.

The currency is expected to track equity and commodity markets ahead of the Canadian budget, said George Davis, chief technical strategist at RBC Capital Markets.   Continued...