CANADA FX DEBT-C$ weakens further on euro zone doubts

Wed Sep 28, 2011 3:05pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

 * C$ falls to C$1.0289 vs US$, or 97.19 U.S. cents
 * C$ following global equities lower
 * Bond prices mixed, short end prices firm
 (Updates, adds analyst comment)
 By Andrea Hopkins
 TORONTO, Sept 28 (Reuters) - The Canadian dollar weakened
further against its U.S. counterpart on Wednesday as riskier
assets remained vulnerable to doubts over the ability of
European policy makers to stem a debt crisis that threatens to
trigger a global recession.
 Canadian and U.S. stocks fell as sharp declines in metals
and energy prices weighed on commodity-related stocks and
underscored concerns about the global economy and Europe's
festering debt crisis. [.TO] [.N]
 The European Union confirmed negotiators would return to
Greece this week to discuss issuing its next tranche of aid,
the latest in a series of developments that have not changed
the overall picture of uncertainty in the euro zone.
 "We're just following equities, really," said Shane
Enright, executive director of foreign exchange sales at CIBC
World Markets.
 "We have the German vote on the EFSF tonight and there is
also likely to be comments from the troika that's in Greece
looking at the financing package. So I think we're going to
continue to trade off the back of European headlines between
now and when North American markets open tomorrow morning, and
probably through tomorrow morning as well."
 European Union and IMF inspectors will return to Athens on
Thursday to decide whether the Greek government has done enough
to secure help from its neighbors and avoid a default. Germany
suggested a new bailout may have to be renegotiated. For
details see [ID:nL5E7KS0AC].
 At 2:48 p.m (1848 GMT), the Canadian dollar CAD=D4 was at
C$1.0289 to the U.S. dollar, or 97.19 U.S. cents, down from
Tuesday's North American session close at C$1.0204 to the U.S.
dollar, or 98 U.S. cents.
 Blake Jespersen, director of foreign exchange sales at BMO
Capital Markets, noted significant Canadian-dollar support
around C$1.03 and little in the way of resistance until the
currency gets back toward parity.
 "We continue to see very wide price action on any data and
any headline, so markets are definitely jittery and liquidity
continues to be a bit of a concern," Jespersen said.
 The U.S. dollar also rose on U.S. economic data that showed
businesses stepped up investment spending in August, prompting
some economists to raise their forecasts for U.S. economic
growth this quarter. [ID:nS1E78R088]
 Bond prices were mixed. The two-year Canadian government
bond CA2YT=RR was up 13.5 Canadian cents to yield 0.95
percent, while the 10-year bond CA10YT=RR fell 38 Canadian
cents to yield 2.237 percent.
 (Additional reporting by Claire Sibonney; Editing by Jeffrey
Hodgson)