CANADA FX DEBT-C$ hits 3-week low as investors shun risk

Wed Oct 28, 2009 4:47pm EDT
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 * C$ finishes at C$1.0785 to U.S. dollar
 * Slide in oil prices helps fuel drop
 * Canadian bond prices higher across curve
 (Updates to close, adds details, quote)
 TORONTO, Oct 28 (Reuters) - The Canadian dollar fell to its
lowest level in just over three weeks on Wednesday as investors
shunned currencies considered risky in favor of the U.S. dollar
and oil prices fell on doubt over economic recovery.
 The dour mood sent the Canadian currency as low as C$1.0804
to the U.S. dollar, or 92.56 U.S. cents, its lowest level since
early October.
 "Everyone is taking their risk trades off the table today,"
said Benjamin Reitzes, economist at BMO Capital Markets.
 "Stock markets are significantly weaker and that's showing
up in the currency market. The U.S. dollar is pretty much bid
across the board."
 The price of oil, a key Canadian export whose price often
influences Canada's currency, fell below $78 a barrel after
data showed a surprise build in U.S. gasoline inventories.
 North American stock markets fell on weak commodity prices
and soft corporate earnings, as well as disappointing U.S. home
sales data for September. [.TO] [.N]
 The Canadian unit finished at C$1.0785 to the U.S. dollar,
or 92.72 U.S. cents, down from C$1.0661 to the U.S. dollar, or
93.80 U.S. cents, at Tuesday's close.
 "Maybe it's the sense that we've come a bit too far, too
fast, and maybe a time for correction," Reitzes said.
 The move lower adds to recent Canadian dollar losses on the
lingering impact of Bank of Canada statements of concern about
the appreciation of the currency offsetting economic recovery.
 Canadian bond prices were higher across the curve, tracking
U.S. Treasuries prices, which rose on Wednesday after
surprisingly bleak U.S. home sales data cast doubt on economic
recovery. [US/]
 "People are moving from equities to safer bonds. That's
giving bonds a bid and putting yields down," Reitzes said.
 The two-year bond CA2YT=RR rose 9 Canadian cents to
C$99.62 to yield 1.436 percent, while the 10-year bond
CA10YT=RR added 25 Canadian cents to C$102.45 to yield 3.447
 The 30-year bond CA30YT=RR gained 50 Canadian cents to
C$117.40 to yield 3.957 percent.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)