CANADA FX DEBT-C$ weaker as commodities fall, USD firms

Wed Jul 24, 2013 4:53pm EDT
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* C$ at C$1.0316 to US$, or 96.94 U.S. cents
    * Currency comes off one-month high
    * Bond prices lower

    By Cameron French
    TORONTO, July 24 (Reuters) - The Canadian dollar fell for
the first time in a week on Wednesday, pulling back from a
one-month high on the back of a stronger U.S. dollar, weaker
commodity prices and falling Canadian stocks.
    Both gold and oil were down sharply, hurting the value of
Canadian exports of both commodities, although that price move
was largely a function of the rallying U.S. greenback.
    "It's a broad-based U.S. dollar strength story, and part of
that is weaker oil and that definitely doesn't help the Canadian
dollar," said Benjamin Reitzes, senior economist and foreign
exchange strategist at BMO Capital Markets.
    Also pressuring the currency was a 0.7 percent drop in
Canada's main stock index, as investors took a cautious view of
riskier assets. 
    The Canadian dollar finished its North American
session at C$1.0316 to the U.S. dollar, or 96.94 U.S. cents,
down from Tuesday's North American session close of C$1.0285, or
97.23 U.S. cents.
    The currency has been rising fairly steadily over the past
two weeks and hit a one-month high of 97.45 U.S. cents early in
the session, helped by strong sentiment from Tuesday's stellar
Canadian retail sales data for May. 
    On Wednesday, strong U.S. data had an impact, with the
greenback boosted by a jump in U.S. new-home sales to a
five-year high in June. 
    Longer-term Canadian government bond prices extended their
recent slide, with the yield on the 30-year bond briefly rising
above 3 percent on Wednesday for the first time since October
2011. The yield had hit a record low of 2.194 percent last July.
    The yields on 10- and 30-year Canadian government bonds sank
to historic lows last year as investors, fearing the fallout of
Europe's debt crisis, bought defensive assets.
    But bond yields have climbed in recent months as encouraging
economic data increased expectations the U.S. Federal Reserve
will begin winding down its bond-buying plan this year. The Bank
of Canada is seen hiking interest rates next year. 
    The two-year bond fell 6 Canadian cents to yield
1.148 percent, and the benchmark 10-year bond shed
56 Canadian cents to yield 2.476 percent.