CANADA FX DEBT-C$ up from year low on talk of ECB action

Mon Sep 26, 2011 8:32am EDT
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  *C$ hits Sept. 2010 low before recovering
  *Bond prices fall across curve
 By Claire Sibonney
 TORONTO, Sept 26 (Reuters) - The Canadian dollar recovered
from its weakest level in more than a year against the U.S.
dollar on Monday as risk sentiment turned around on signs the
European Central Bank was being more proactive in tackling the
euro zone debt crisis.
 European policymakers began on working on new
ways to stop fallout from Greece's near-bankruptcy from
inflicting more damage on the world economy. [ID:nS1E78O01Z]
 "Through the Asian session, markets have been selling risk
and they've been buying them back through London, the Canadian
dollar just being dragged on by that really," said Adam Cole,
global head of FX strategy at RBC Capital Markets in London.
 The move in the Canadian currency tracked a pickup in world
stocks and the euro after ECB Governing Council member Ewald
Nowotny was quoted as saying that the possibility of interest
rate cuts should not be ruled out. [MKTS/GLOB]
 Last week, traumatized investors pushed the Canadian dollar
5 percent lower against the safe-haven greenback.
 At 8:14 a.m. (1414 GMT), the Canadian dollar CAD=D4 stood
at C$1.0286 to the U.S. dollar, or 97.22 U.S. cents, up
slightly from Friday's North American session at C$1.0294 to
the U.S. dollar, or 97.14 U.S. cents.
 Earlier, the currency slipped as low as $1.0386, or 96.28
U.S. cents, its worst level since Sept. 9, 2010.
 Cole noted there was significant support for the Canadian
dollar around last September's trough near C$1.0670. Resistance
is back toward parity where the currency has held for most of
the year, though getting back there will be a struggle.
 "It's difficult to see a catalyst ... there are still so
many concerns over the banking system in Europe and the
direction of euro zone policy and failure of the various
parties involved to reach any kind of binding agreement."
  Bond prices were lower across the curve. The two-year
Canadian government bond CA2YT=RR was down 8 Canadian cents
to yield 1.033 percent, while the 10-year bond CA10YT=RR shed
27 Canadian cents to yield 2.104 percent.
  (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)