CANADA FX DEBT-C$ stumbles to near 3-wk low as risk trade off

Fri Nov 27, 2009 8:08am EST
 
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 * Canadian dollar drops to 93.24 U.S. cents
 * Bond prices edge higher across curve
 * Dubai debt concerns continue to ripple through markets
 By Ka Yan Ng
 TORONTO, Nov 27 (Reuters) - Canada's dollar neared a
three-week low versus the U.S. currency on Friday, extending
losses in a risk-averse market that has been shaken by concern
about Dubai's debt problems.
 Also dragging on the currency was sagging oil prices,
nearly 5 percent towards $74 a barrel. Canada is a key exporter
of oil and the resource's movements often provide direction for
the Canadian dollar. [O/R]
 Overnight, the currency stumbled as low as C$1.0750 to the
U.S. dollar, or 93.02 U.S. cents, though it pared losses ahead
of the North American session open.
 At 7:53 a.m. (1253 GMT), the Canadian dollar was at
C$1.0725 to the U.S. dollar, or 93.24 U.S. cents, down from
C$1.0605 to the U.S. dollar, or 94.30 U.S. cents, at Thursday's
close.
 "It seems the risk trade is off the table and the Canadian
dollar is suffering the brunt of that. It is one of the worst
performers of the day," said Eric Lascelles, chief economics
and rates strategist at TD Securities.
 "Commodity prices are also off and that links into the
risk-off trade. It's a double whammy for the commodity
players."
 Further direction may stem from Canada's current account
data, due at 8:30 a.m., and is expected to show the deficit
widened to C$13.35 billion in the third quarter, after posting
a C$11.2 billion deficit in the second quarter.
 But market liquidity may still be thin after the U.S.
Thanksgiving holiday. Market players may also opt to mark time
ahead of Monday's key third-quarter gross domestic figures,
which is expected to herald Canada's return to slim growth.
[ID:nN26398658]
 Canadian bonds edged slightly higher across the curve,
building on gains made in the previous session on the back of
the debt concerns out of Dubai.
 The two-year Canadian government bond CA2YT=RR edged up 3
Canadian cents to C$100.32 to yield 1.188 percent, while the
10-year bond CA10YT=RR gained 3 Canadian cents to C$104.55 to
yield 3.191 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)
 ((kayan.ng@thomsonreuters.com; Reuters Messaging:
kayan.ng.reuters.com@reuters.net; 416-941-8109))
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