August 10, 2009 / 1:34 PM / 11 years ago

CANADA FX DEBT-C$ edges lower as risk aversion increases

 * C$ extends last week's 0.4 pct drop
 * The impact of Friday's weak Canadian jobs data lingers
 * Bond prices higher across curve
 By Frank Pingue
 TORONTO, Aug 10 (Reuters) - Canada's dollar was slightly
lower on Monday morning as a slide U.S. equity futures lent a
bid to the greenback after a flat overnight session where most
major currencies stuck within a tight range.
 The fall extended last week's 0.4 percent drop, a move that
was driven by a disappointing domestic jobs report and comments
from Canadian Finance Minister Jim Flaherty, who warned that
steps could be taken to slow the currency's ascent.
 With no Canadian or U.S. data to consider, it appears as
though the domestic currency's direction in Monday's session
will be dictated largely by the performance of equity markets.
 "Over the last hour or so we have seen U.S. equity futures
start to sell off a bit and that's given the (U.S.) dollar a
bit of a bid tone as risk aversion levels increased and so the
Canadian dollar has come under a bit of selling pressure," said
George Davis, chief technical strategist at RBC Capital
 "Those are the themes that are going to drive the market,
i.e. what equities do and what impact that's going to have on
the major currencies and filter through into the Canadian
 At 9:20 a.m. (1320 GMT), the Canadian unit was at C$1.0839
to the U.S. dollar, or 92.26 U.S. cents, down from C$1.0823 to
the U.S. dollar, or 92.40 U.S. cents, at Friday's close.
 Davis also said the currency's performance could hinge on
the actions of the U.S. Federal Reserve, which ends a two-day
policy meeting on Wednesday. The central bank is expected to
keep its fed funds rate at 0-0.25 percent. [ID:nN07416548]
 Canadian bond prices moved higher across the curve as the
turn lower in U.S. stock index futures revived interest in more
secure assets like government debt.
 Bond dealers will be keeping an eye on this week's U.S.
Treasury auctions of $75 billion in three- and 10-year notes,
along with 30-year bonds. The total of the auctions is a record
size for a quarterly refunding.
 The two-year Canadian bond was up 4 Canadian cents at
C$99.08 to yield 1.456 percent, while the 10-year bond rose 20
Canadian cents to C$101.30 to yield 3.591 percent.
 The 30-year bond was up 5 Canadian cents at C$115.35 to
yield 4.072 percent. In the United States, the 30-year bond
yielded 4.602 percent.
 (Editing by Theodore d'Afflisio)

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