CANADA FX DEBT-C$ weakens with oil prices, risk aversion

Mon Sep 8, 2014 10:00am EDT
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* Canadian dollar at C$1.0910 or 91.66 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, Sept 8 (Reuters) - The Canadian dollar weakened
against the greenback on Monday, pulled lower by weaker oil
prices and as investor risk aversion rattled world markets.
    The loonie also suffered from the overhang of disappointing
labor market data last Friday that showed the Canadian economy
unexpectedly shed jobs in August.
    Data released Monday morning showed the value of domestic
building permits had a surprise surge in July, but that did
little to stem the loonie's weakness. 
    The Canadian dollar strengthened against the British pound,
however, as sterling was hit by worries that Scotland might
split from the rest of Britain. The concerns spilled over to
markets more broadly. Brent crude fell below $100 a
barrel for the first time in 14 months.
    An opinion poll released over the weekend showed supporters
of Scottish independence in the lead for the first time ahead of
a referendum set for Sept. 18. 
    "It's another disruptive event out there," said Don
Mikolich, executive director of foreign exchange sales at CIBC
World Markets in Toronto, said of the Scottish vote.
    "In that world of the geopolitical, it's one more risk
factor that no one quite knows how it will end up and ultimately
unfold if there was the 'yes' vote."
    The Canadian dollar was at C$1.0910 to the
greenback, or 91.66 U.S. cents, weaker than Friday's close of
C$1.0881, or 91.90 U.S. cents.
    The loonie has seen some choppy trading in the last two
weeks with significant moves both up and down, but analysts
expect it will be comfortable trading around the C$1.09 mark for
    Some of the large gains at the end of August had been due to
fund flow speculation on the back of Burger King's bid
to buy Canada's Tim Hortons coffee and snacks chain. 
    "In the lack of any big Canadian dollar buying that we had
seen previously from some of the M&A transactions, the data
itself has been a little bit of a let down," Mikolich said.
    "The C$1.0850 to C$1.0950 range still remains largely
    Canadian government bond prices were higher across the
maturity curve, with the two-year up half a Canadian
cent to yield 1.112 percent, and the benchmark 10-year
 up 15-1/2 Canadian cents to yield 2.102 percent.

 (Editing by Peter Galloway)