CANADA FX DEBT-C$ weaker as renewed recession fears persist
* C$1.0308 vs US$, or $0.9701
* C$ likely to take direction from U.S. equities
* Global fears remain as policymakers talk
* Bond prices mixed
By Andrea Hopkins
TORONTO, Sept 23 (Reuters) - The Canadian dollar started the session weaker against its U.S. counterpart on Friday, near 11-month lows, as risk sentiment remained fragile on fears of renewed recession even as some markets recovered.
European shares edged up from 26-month lows on Friday and the euro rose after the G20 major economies pledged to preserve financial stability, but risk sentiment remained fragile on fears of renewed recession in the developed world.
U.S. stock index futures pointed to a tentative recovery on Wall Street after finance ministers and central bankers from the Group of 20 said they would take "all steps necessary" to calm the global financial system and said central banks were ready to provide liquidity. [MKTS/GLOB]
Traders said the Canadian dollar was victim to the larger story of U.S. dollar strength, and would take its direction from U.S. equities.
"This is not a Canadian story here, so we're going to be held accountable like everybody else is to the direction that equities give us," said C.J. Gavsie, managing director of foreign exchange sales at BMO Capital Markets.
The Canadian dollar CAD=D4 stood at C$1.0308 to the U.S. dollar in early trade, or 97.01 U.S. cents, below Thursday's North American session close at C$1.0274 to the U.S. dollar, or 97.33 U.S. cents.
It sank as low as C$1.0350 overnight, off Thursday's weakest level.
While Canada's economy has generally been a bright spot amid global woes, helping to buoy the currency, it cannot continue to outperform if its largest trading partner, the United States, continues to slump.
Gavsie said the Canadian dollar would likely find some resistance near the overnight strength of C$1.0226 to the U.S. dollar. On the weak side, the currency was meeting support at about C$1.0345 to the U.S. dollar, but Gavsie said there was really no way of gauging how far the Canadian dollar could sink if world markets started going the wrong way.
"There is a multi-week high from September to October in the C$1.0375-80 area. And then it's unfortunately wide open up until the top, up to C$1.0513," he said.
"We're going to have to wait to see how this one plays out."
Bond prices were mixed. The two-year Canadian government bond CA2YT=RR was up 1 Canadian cent to yield 0.831 percent, while the 10-year bond CA10YT=RR climbed 3 Canadian cents to yield 2.021 percent. (Editing by Theodore d'Afflisio)
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