CANADA FX DEBT-C$ falls in illiquid trade, bonds down

Wed Dec 30, 2009 9:42am EST
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 * C$ falls to 95.15 U.S. cents
 * Greenback gains against range of currencies
 * Bond prices down, underperform U.S. counterparts
 TORONTO, Dec 30 (Reuters) - The Canadian dollar fell versus
a broadly stronger U.S. currency on Wednesday, backing further
away from a 2-1/2 month high hit in the previous session in
illiquid conditions.
 The greenback gained across the board on Wednesday, hitting
its highest since late September against the Japanese yen as it
benefited from year-end flows in thin trade and from the view
the U.S. economy is on the road to recovery.  [FRX/]
 After a technical point was triggered in the previous
session, market players took the Canadian currency to a high
not seen since Oct. 20 at 96.47 U.S. cents, but the move was
 "It was a little bit overdone. Expectations as to Canada
holding better levels sub-C$1.04 is probably unrealistic at
this point in time. There's not enough participants in the
market to support those levels just yet," said C.J. Gavsie,
managing director of foreign exchange sales at BMO Capital
 "We do believe going forward into early to mid-January we
will retest those levels. If we do see them by the end of this
week it's only going to be on sharp flows that are probably
going to recoil."
 For the time being, the C$1.0450-C$1.05 range will likely
be a bit more of a "natural" level, he added. Thin trading
conditions will likely make for further exaggerated moves.
 At 9:27 a.m. (1415 GMT), the Canadian dollar was at
C$1.0528 to the U.S. dollar, or 94.98 U.S. cents, down from
C$1.0438 to the U.S. dollar, or 95.80 U.S. cents, at Tuesday's
 No Canadian economic data is on tap this week, but   
investors may look to the Institute for Supply
Management-Chicago's business barometer for the U.S. Midwest in
December at 1445 GMT on Wednesday for direction.
 Canadian bond prices were lower and mostly underperforming
their U.S. counterparts ahead of a seven-year U.S. bond auction
later in the day.
 The U.S. Treasury will offer $32 billion of seven-year
bonds, the last of this week's three debt sales totalling $118
 The two-year Canadian government bond CA2YT=RR was off 3
Canadian cents at C$99.62 to yield 1.453 percent, while the
10-year bond CA10YT=RR fell 28 Canadian cents to C$100.82 to
yield 3.646 percent.
 (Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)