CANADA FX DEBT-C$ sags as appetite for risk fades
* Down at C$1.0662 to the US$, or 93.79 U.S cents
* Lower North American stock markets help pull C$ lower
* Bond prices firmer across curve (Updates to close, adds quote)
By Jennifer Kwan
TORONTO, Jan 28 (Reuters) - The Canadian dollar limped to a lower close against the U.S. dollar on Thursday, pressured by a drop in risk appetite that manifested itself in a stronger greenback and sliding equity markets.
Concern about the fiscal health of Greece and other smaller euro zone countries helped lift the U.S. dollar to a 6-1/2 month peak against the euro. [FRX/]
"Given the return of risk aversion, the commodity-based currencies traded with a weaker bias," said Matthew Strauss, senior currency strategist at RBC Capital Markets.
The Canadian dollar finished at C$1.0662 to the U.S. dollar, or 93.79 U.S. cents, down from Wednesday's finish at C$1.0647 to the U.S. dollar, or 93.92 U.S. cents. It touched a low of C$1.0668 to the U.S. dollar, or 93.74 U.S. cents, earlier in the day.
In the overnight session, the Canadian dollar had risen as high as C$1.0555 to the U.S. dollar, or 94.74 U.S. cents, after U.S. President Barack Obama helped build confidence in his State of the Union address by focusing on job creation rather stricter Wall Street oversight. [MKTS/GLOB]
Also weighing on market sentiment on Thursday was U.S. economic data that showed initial jobless claims fell less than forecast in the latest week. Also, U.S. durable goods orders rose in December, but to a level below that forecast by a Reuters poll of economists. [ID:nN28241882]
As well, the price of crude oil CLc1, a key Canadian export, settled below $74 a barrel [O/R], pressured in part by the stronger greenback. Gold prices were also softer. [GOL/]
Market focus on Friday is expected to be on the release of U.S. fourth-quarter gross domestic product data and Canada's November GDP.
Government bond prices were mostly firmer as equity markets lost ground as money flowed to the safety of government debt. [US/]
"Stocks are lower. That's been the theme for the past week or so. Basically, it's a reversal of the risk trade," said Sheldon Dong, fixed income analyst at TD Waterhouse Private Investment.
The two-year bond CA2YT=RR was up 8 Canadian cents at C$100.34 to yield 1.333 percent, while the 30-year bond CA30YT=RR climbed 45 Canadian cents to C$117.60 to yield 3.942 percent.
Canadian bonds mostly outperformed U.S. bonds across the curve, with the Canadian 30-year bond 62.5 basis points below the U.S. 30-year yield, compared with about 59 basis points in the previous session. (Editing by Peter Galloway)
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