CANADA FX DEBT-C$ weakens; 2014 low within sight

Tue Oct 14, 2014 9:51am EDT
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* Canadian dollar at C$1.1230 or 89.05 U.S. cents
    * 10-yr yield at lowest since May 2013

    By Leah Schnurr
    TORONTO, Oct 14 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday as worries about slower global
growth brought the currency within striking distance of its 2014
    Weaker oil prices also weighed on the loonie after the
International Energy Agency cut its estimates for oil demand
this year and next. 
    At the same time, the Organization of Petroleum Exporting
Countries has shown little sign it will cut output, with Saudi
Arabia quietly telling market participants it is comfortable
with lower oil prices for an extended time. 
    Growth fears were prevalent in the markets after data showed
a slide in German investor sentiment. The German government also
lowered its growth forecasts for 2014 and 2015. 
    "The concern there is not so much in regards to the
periphery dragging down the euro zone, but the engine of growth
in the common currency block not being able to save itself if
more headwinds crop up," said Scott Smith, senior market analyst
at Cambridge Mercantile Group in Calgary.
    The loonie earlier hit a low of C$1.1258, its lowest level
in a week and near 2014's low of C$1.1279, which was seen in
    "We're again back to testing the lows for the Canadian
dollar for the year," Smith said.
    The Canadian dollar was at C$1.1230 to the
greenback, or 89.05 U.S. cents, weaker than Friday's official
close from the Bank of Canada of C$1.1217, or 89.15 U.S. cents.
Most market participants in Canada were away on Monday for the
Thanksgiving holiday.
    The Canadian dollar has been on a downward slope since July,
driven lower by a rally in the U.S. dollar. The loonie took a
run at 2014's low earlier this month but failed to breach it.
    With no economic data on tap, the Canadian dollar should see
a tight range between around C$1.1260 and C$1.1175, Smith said.
The domestic economic calendar remains quiet until Friday when
inflation figures are due.
    The yield on the two-year Canadian government
bond fell below 1 percent to hit its lowest level since
    The benchmark 10-year was at its lowest level
since May 2013, yielding 1.956 percent, up 48 cents in price.

 (Editing by Peter Galloway)