3 Min Read
* C$ at C$1.0360 vs US$, or 96.53 U.S. cents * Fed signals end to stimulus, roil global markets * Canada currency hurt less than other commodity currencies * Canadian bond yields hit 18-month highs By Alastair Sharp TORONTO, June 20 (Reuters) - The Canadian dollar lost almost a cent versus the U.S. dollar in early trade on Thursday as the greenback exhibited broad strength on the back of Federal Reserve optimism about the U.S. economy and labor market. The Canadian dollar touched its weakest point in two weeks a day after Fed Chairman Ben Bernanke said the U.S. central bank could soon slow its bond-buying program and end it by the middle of 2014. "Bernanke certainly seemed to message, or at least set the stage for QE ending in the next few months. That was enough for the (U.S.) dollar to regain some of its losses," said Greg Moore, a currency strategist at TD Securities, referring to a return of U.S. dollar strength after several weeks of weakness. Yields on Canadian government debt jumped to 18-month highs, following U.S. Treasuries higher as investors exited the safe haven asset and seemingly moved en masse into the U.S. currency. Global stock markets slumped on the Fed news and as Chinese data suggested growth there was waning, this in turn hit commodity prices and the currencies of major resource exporters. The Australian and New Zealand dollars were particularly hard hit, while the loonie was protected in part by its proximity to the improving U.S. economy. The Aussie hit its weakest against the loonie since September 2010. "The Canadian dollar may suffer a little bit less than some of its commodity currency cousins ... but nevertheless a stronger U.S. economy, while it's good for the Canadian economy, it's obviously better for the U.S. economy," TD's Moore said. At 9:35 a.m. (1335 GMT) the Canadian dollar was trading at C$1.0360 to the greenback, or 96.53 U.S. cents, compared with C$1.0273, or 97.34 U.S. cents, at Wednesday's North American close. It was the currency's biggest one-day move lower in a month. The global selloff overshadowed news that household debt in Canada, relative to income, fell for the second straight quarter, data showed on Thursday. The Bank of Canada has previously voiced concern about consumer debt, but lately seems more confident this is now under control. The two-year bond was up 7 Canadian cents to yield 1.203 percent, while the benchmark 10-year bond rose 42 Canadian cents to yield 2.304 percent, its highest level since late in 2011. Domestic inflation and retail sales data is due out on Friday.