August 7, 2013 / 8:44 PM / 7 years ago

CANADA FX DEBT-C$ falls as Fed talk, China data weighs

By Alastair Sharp
    TORONTO, Aug 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday as signs the U.S.
Federal Reserve could trim its stimulus weighed on commodities
and their related currencies.
    The loonie, as Canada's currency is known colloquially, was
also being pressured ahead of the release of Chinese trade data
overnight, which will update demand in the major commodity
    "For Canada, we have some FX risk overnight with the release
of Chinese trade data, so that could be weighing on it (the
Canadian dollar)," said Camilla Sutton, chief currency
strategist at Scotiabank.
    The Canadian currency pushed as high as C$1.0445
against the greenback in early trade, the first time it has been
above C$1.04 since mid-July, after two U.S. central bank
officials suggested the Fed may reduce the pace of bond
purchases as early as next month. 
    "The markets that have benefited from the largesse of the
Fed over the last few years are probably going to see some
headwinds at least if they start to reel back, with additional
worries about China and slower growth in Asia not helping out,"
said Shaun Osborne, chief currency strategist at TD Securities.
    It ended the North American session trading at C$1.0423 to
the greenback, or 95.94 U.S. cents, compared with C$1.0376, or
96.38 U.S. cents, at Tuesday's close.
    Brent oil slipped below $108, and copper and other
industrial metals fell on a mix of worries about slowing China
growth, easing of supplies, and the Fed signals.  
    Canada's currency is affected by moves in global commodity
markets, given its economy is heavily dependent on exports of
natural resources.
    Prices for Canadian government debt were higher across the
curve, with the two-year bond up 1.5 Canadian cents
to yield 1.146 percent, and the benchmark 10-year bond
 rising 13 Canadian cents to yield 2.504 percent.
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