CANADA FX DEBT-C$ weaker as commodities slump

Thu Jan 29, 2009 10:36am EST
 
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* C$ weaker as oil drops toward $41 a barrel, metals drop

* Bonds largely lower as supply concerns persist

By Jennifer Kwan

TORONTO, Jan 29 (Reuters) - Canada's dollar weakened against the U.S. dollar on Thursday but traded in a relatively tight range, as the price of oil dropped on heightened demand concerns and metals prices also weakened.

For most of the morning, the Canadian unit was pressured by slumping commodity prices [ID:nN27479179], but the currency rose slightly following the release of U.S. economic data that showed jobless rolls shot up to a record in mid-January, while new orders for durable goods plummeted in December. [ID:nN29272638]

"The cloud has darkened over the U.S. economy and that may have undermined the U.S. dollar a little bit since those numbers came out, providing a little bit of support for the Canadian dollar," said Michael Gregory, senior economist at BMO Capital Markets.

Shortly after, however, the Canadian currency fell back again as commodities weighed.

At 9:57 a.m. (1457 GMT), the Canadian dollar was at C$1.2166 to the U.S. dollar, or 82.20 U.S. cents, down from Wednesday's close of C$1.2152 to the U.S. dollar, or 82.29 U.S. cents.

Domestic bond prices dropped as supply concerns continued to pressure the more secure government debt.   Continued...