November 8, 2010 / 9:49 PM / in 10 years

CANADA FX DEBT-C$ ends string of gains as greenback firms

 * C$ ends at 99.63 U.S. cents
 * Bonds lower across yield curve
 * Oct house starts down 9.2 pct at 167,900 units
 (Updates to close, adds quote)
 By Jennifer Kwan
 TORONTO, Nov 8 (Reuters) - The Canadian dollar ended lower
on Monday for the first time in eight sessions, retreating from
parity with the U.S. currency as fresh concerns about euro zone
debt pushed investors into the safety of the greenback.
 The U.S. dollar rose on renewed concerns about Ireland's
resolve to address its staggering debt load. That dragged the
euro lower and gave the dollar a reprieve from weeks of
drubbing, but gold surged on worries about inflation.
 The Canadian dollar also came under pressure after a
larger-than-expected 9.2 percent decline in domestic housing
starts in October and a downward revision in the September
count. [ID:nN08223816] ECONCA  Fresh evidence of a cooling
housing sector heightened concern about its impact on the
overall economy.
 The Canadian dollar CAD=D4 reached as high as 99.93
Canadian cents to the U.S. dollar, or $1.0007. But even as it
retreated it was generally outperforming other currencies, said
Camilla Sutton, chief currency strategist at Scotia Capital.
 "In terms of what's dragging it lower it really is just
U.S. dollar strength overall. In terms of Canada we have
positive equity markets, we have gold above $1,400 for the
first time, oil holding in," said Sutton. [O/R] [GOL/]
 Toronto's main stock index climbed to a two-year peak on
Monday, closing above 13,000 for the first time since Sept.
2008, as gold miners rallied sharply after the price of bullion
powered to an all-time high. [.TO]
"Canada is holding in pretty well and probably reflecting a
commodity push," Sutton said.
 The currency finished at C$1.0037 to the U.S. dollar, or
99.63 U.S. cents, down from Friday's finish at C$1.0004 to the
U.S. dollar, or 99.96 U.S. cents.
 After last week's stimulus announcement by the  U.S.
Federal Reserve and other market-moving events, this week is
expected to be quieter, analysts said.
 September data on new housing prices and international
trade are due out later in the week, while Bank of Canada
Governor Mark Carney will speak in Geneva about Canada and
global financial reform on Tuesday. [ECON/CA]
 While the market will closely monitor Carney's comments,
Sutton doubted the speech will offer fresh insight on monetary
 Traders will also monitor developments ahead of the Group
of 20 meeting in Seoul later this week. The G20 summit is
billed as an opportunity for leaders of the countries that
account for 85 percent of world output to prevent a rush to
protectionism that could imperil the global recovery.
 Bonds declined across the yield spectrum, as traders
largely ignoring the weak domestic housing data. The drop
followed the trend in U.S. Treasuries. [US/]
  "Today's housing starts number was softer than expected,
but the details weren't as bad," said Kam Bath, fixed income
strategist at RBC Capital Markets.
 "Friday we saw nonfarm payrolls surprise on the upside and
the details of the report were pretty firm," he added,
referring to the drop in Treasury debt prices. "It's a
continuation of the move we saw on Friday after the firm
payrolls number"
 U.S. employment surged much more than expected last month
as private companies hired workers at the fastest pace since
April, a sign the sluggish economy is finally starting to tick
up. [ID:nN04265378]
 The two-year bond CA2YT=RR shed 12 Canadian cents to
yield 1.535 percent, while the 10-year bond CA10YT=RR sank 25
Canadian cents to yield 2.885 percent.
 Canadian bonds mostly underperformed U.S. Treasuries across
the yield curve. The Canadian 2-year bond  CA2YT=RR was 113
basis points above the U.S. 2-year yield, compared with about
111 basis points above on Friday.
 (Additional reporting by Ka Yan Ng; Editing by Frank McGurty)

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