CANADA FX DEBT-C$ ends little changed after seesaw session

Mon Sep 26, 2011 4:37pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

   * Closes at C$1.0283, or $97.25 U.S. cents
 * Uncertainty over Europe drives market sentiment
 * Bond prices fall across curve
 (Updates to close, adds analyst's comment)
 By Andrea Hopkins
 TORONTO, Sept 26 (Reuters) - The Canadian dollar ended
little changed against the U.S. dollar on Monday after a seesaw
session as markets swung between hope and gloom over progress
in talks to bail out debt-laden European nations.
  Equities rallied as euro-zone optimism gained force, with
the Dow Jones industrial average closing more than 2.5 percent
higher.
 But silver fell as much as 16 percent and gold slid nearly
4 percent, hit by momentum selling and by heavy selling by
commodity hedge funds seeking to raise cash to meet losses
elsewhere. [ID:nL5E7KQ144]
 In a sign of progress, European officials are working on
ways to magnify the financial firepower of the euro zone's
rescue fund to fight the sovereign debt crisis more
effectively, a senior European Central Bank policymaker said.
[ID:nLDE78P01H]
 Markets have whipsawed for months over fears of European
debt contagion and hopes that officials will finally contain
the crisis.
 "It's been one of those days of to and fro. We had
bearishness, then sentiment improved, then we had bearishness,
then sentiment improved again," said David Watt, senior
currency strategist at Royal Bank of Canada.
 "We don't really have anything concrete for markets to
trade on these days so they tend to go whichever way the wind
happens to be blowing, and whatever rumor happens to be
grabbing the market's attention drives general market
sentiment."
 The Canadian dollar CAD=D4 ended the North American
session at C$1.0283 to the U.S. dollar, or $97.25 U.S. cents,
little changed from Friday's North American session close of
C$1.0294 to the U.S. dollar, or 97.14 U.S. cents.
 Earlier in the day, it fell as low as $1.0386, or 96.28
U.S. cents, its lowest level since Sept. 9, 2010.
 Last week, traumatized investors pushed the Canadian dollar
5 percent lower against the safe-haven greenback.
 Adam Cole, global head of FX strategy at RBC Capital
Markets in London, said 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," Cole
said.
 Watt said there is little on the horizon to give the
Canadian dollar definite direction, so the latest headlines
about Europe or U.S. growth may continue to set the tone.
 "Unfortunately that might be the way it remains until we
get some clarity as to what is going to happen, specifically in
the euro zone and elsewhere as well," Watt said.
  Bond prices were lower across the curve. The two-year
Canadian government bond CA2YT=RR was down 14.5 Canadian
cents to yield 0.937 percent, while the 10-year bond
CA10YT=RR shed 67 Canadian cents to yield 2.147 percent.
 (Additional reporting by Claire Sibonney; editing by Peter
Galloway)