April 7, 2009 / 12:17 PM / in 11 years

CANADA FX DEBT-C$ shaken by weak European data, low oil prices

 * C$ skids to lowest level since April 2
 * Thursday's Canadian jobs data in focus
 * Bond prices up as stocks set for lower open
 By Frank Pingue
 TORONTO, April 7 (Reuters) - Canada's currency dropped on
Tuesday to its lowest level since last week versus the U.S.
greenback, bogged down by weaker oil prices and nagging
concerns about the health of the global economy.
 The price of oil, a key Canadian commodity and export, fell
closer to $50 a barrel while weak European data fanned concerns
about corporate profits and left investors less willing to take
on riskier assets.
 "Essentially general risk aversion is what's driving the
Canadian dollar weaker right now," said Benjamin Reitzes, an
economist at BMO Capital Markets.
 "And along with that oil prices are a little weaker and
some commodities are generally weaker and that's generally
weighing on the Canadian dollar as well."
 At 8:00 a.m. (1200 GMT), the Canadian unit was at C$1.2465
to the U.S. dollar, or 80.22 U.S. cents, down from C$1.2385 to
the U.S. dollar, or 80.74 U.S. cents, at Monday's close.
 Earlier, it had fallen as low as C$1.2486 to the U.S.
dollar, or 80.08 U.S. cents. which marked the currency's lowest
level since April 2.
 Data from Europe showed the euro zone economy shrank more
than expected, underlining the depth of the recession and
sparking a slide in European stocks that was expected to carry
into the North American session. [ID:nL798677]
 With no Canadian data due out on Tuesday, the Canadian
dollar is likely to be influenced largely by the price of oil
and direction of equities.
 Canadian housing starts data for March will be released on
Wednesday, but the week's key piece of domestic data comes on
Thursday with the release of the March jobs data.
 "The housing starts tomorrow could have could have a minor
impact but that's unlikely," said Reitzes. "The jobs data are
what counts at this point."
 The Canadian economy is expected to have shed 55,000 jobs
in March following a loss of 82,600 jobs in February, which
would further support a widespread view that the economy
contracted in the first quarter of 2009.
 Canadian government bond prices, with no domestic news to
spark a move, followed the bigger U.S. Treasury market higher
as North American equity futures pointed to a lower open.
 One drag on U.S. equity futures, which often influences
Canadian investors, came from a report that the International
Monetary Fund was set to forecast toxic assets on the balance
sheets of financial corporations could reach $4 trillion.
[ID:nT186243] and [ID:nN07442902]
 "Risk aversion drives money out of equities and into bonds
and that definitely gives all fixed income products a boost,"
said Reitzes.
 The two-year Canada bond was up 5 Canadian cents at
C$100.26 to yield 1.126 percent, while the 10-year bond rose 15
Canadian cents to C$106.75 to yield 2.972 percent.
 The 30-year bond was up 25 Canadian cents at C$122.65 to
yield 3.698 percent. In the United States, the 30-year Treasury
yielded 3.7130 percent.
 (Editing by Chizu Nomiyama)

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