CANADA FX DEBT-C$ hits fresh 11-year lows as investor anxiety lingers

Tue Sep 29, 2015 5:20pm EDT
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(Updates with strategist comment, closing figures, additional
    * Canadian dollar ends at C$1.3418, or 74.53 U.S. cents
    * Bond prices mixed across maturity curve

    By Solarina Ho
    TORONTO, Sept 29 (Reuters) - The Canadian dollar extended
its retreat to fresh 11-year lows against the U.S. dollar on
Tuesday, as overall investor sentiment remained somewhat grim
and a host of variables conspired to keep the currency on the
     Global stocks slid to their lowest in more than two years,
while commodity prices and emerging markets like China, a major
commodities consumer, remained under pressure. 
     "We've had more recently, quite a bit more focus on market
volatility, China, weaker equity markets and those things are
tending to correlate more strongly with the Canadian dollar,"
said Shaun Osborne, chief currency strategist at Scotiabank.
    "The poor old Canadian dollar can't seem to hold a bid at
the moment."
    The Canadian dollar, which was weaker against all
of its key counterparts, ended the session at C$1.3418 to the
greenback, or 74.53 U.S. cents, weaker than the Bank of Canada's
official close of C$1.3394, or 74.66 U.S. cents.
    During the session, the currency traded between $1.3373 and
C$1.3457, which was the softest it has been since June, 2004.
    "We're probably going to see some even weaker levels in the
not too distant future. It appears to us we're on the cusp of
potentially another big sell off," said Osborne.
    A higher price in crude, a major Canadian export and driver
for the loonie, helped temper some of the currency's declines.
    In Canada, producer prices for August fell slightly more
than expected following three straight months of gains due to
the lower cost of energy and petroleum products. 
    Canada's gross domestic product for July is due at 8:30 a.m.
EDT on Wednesday. Economists polled by Reuters are expecting a
0.2 percent rise. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year down 0.5 Canadian
cent to yield 0.508 percent and the benchmark 10-year
 rising 9 Canadian cents to yield 1.435 percent.
    The Canada-U.S. two-year bond spread narrowed to -14.5 basis
points, while the 10-year spread narrowed to -62.6 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski and Chris