April 28, 2009 / 8:55 PM / 8 years ago

CANADA FX DEBT-C$ sags as oil drops on swine flu fears

* C$ finishes at 81.93 U.S. cents

* Bond prices lower across the curve (Adds details, quotes)

By Jennifer Kwan

TORONTO, April 28 (Reuters) - Canada’s currency was slightly lower against the U.S. dollar on Tuesday in muted dealings as oil prices sank on concern about the depth of the swine flu outbreak, undercutting the effects of better-than-expected U.S. economic data.

North American equity market trimmed earlier losses on data that showed U.S. consumer confidence posted its biggest jump in more than three years in April, while the slump in U.S. home prices showed signs of slowing in February. [ID:nN28304426]

That helped calm earlier worries that major U.S. banks may need more capital.[MKTS/GLOB]

“In the current environment, anything that looks good for the U.S. economy or global economy is bad for the U.S. dollar,” said David Watt, senior currency strategist at RBC Capital Markets.

The market continued to be fixated by the dangers of a possible flu pandemic as the swine flu virus that has killed 149 people in Mexico spread to more countries. [ID:nLS803449]

“There are so many things such as swine flu, and those sort of things that are roiling in the background. What we’re literally getting is drivers based on conjecture and fear,” Watt said.

“There’s literally no direction right now for the Canadian dollar.”

The Canadian currency finished at C$1.2205 to the U.S. dollar, or 81.93 U.S. cents, down slightly from Monday’s finish of C$1.2195 to the U.S. dollar, or 82.00 U.S. cents.

Oil prices, a key Canadian export, settled lower at $49.92 a barrel due to fears that the swine flu outbreak could further hit fuel demand, already pressured by the global financial crisis. [ID:nSP458959]

BONDS LOWER

Canadian bond prices were lower across the curve alongside the bigger U.S. Treasury market as the U.S. consumer confidence reading dented the safe-haven appeal of government bonds and on supply concerns. [ID:nN28334543]

The two-year Canada bond was down 7 Canadian cents at C$100.54 to yield 0.988 percent, while the 10-year bond slipped 45 Canadian cents at C$105.95 to yield 3.060 percent.

The 30-year bond retreated 75 Canadian cents to C$120.70 to yield 3.795 percent. In the United States, the 30-year Treasury yielded 3.9518 percent.

Canadian bonds largely outperformed their U.S. counterparts across the curve. The Canadian 30-year bond yield was 15.7 basis points below its U.S. counterpart, from about 7 basis points on Monday. (Editing by Peter Galloway)

For Reuters bond and money market pricing information double click on one of the following: CAD= Canadian dollar live quote, high/low FXNEWS Headlines from global forex markets CDBN Canadian bond prices CDMM CDMN <0#CAMMKT=> Canadian money market prices CABONEA Canada-U.S. spreads (live) YLDS1 World yield index CA30YT=RR 30 year benchmark <0#CGB:> CGBc1 <CA/FACTOR1> MEIRP - Montreal Exchange

bond futures pricing information CAMCI= Bank of Canada monetary conditions index (Reuters calculation) CACALL= Canada’s call loan or overnight lending rate

For the fixed-income market speed guides, double click on one of the following: <CA/MMKT1> <CA/MMKT2> <CA/DEBT> BONDS TREASURY For related news, double click on one of the following: [CAN] Canadian news [NAT] North American Treasuries news [M] Money news [D] Debt news [MF] Markets news [GVD] Government debt news [MMT] Money market news [INT] Interest rate news [CEN] Central bank news [CA/] Canadian bond market stories

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