July 10, 2009 / 9:09 PM / in 11 years

CANADA FX DEBT-C$ falls for 4th week; commodities, data weigh

   * C$ ends lower at 85.86 U.S. cents
 * June jobs figures give C$ brief boost
 * Currency undermined by big May trade deficit
 * Bond prices higher across curve
 (Adds details, quote)
 By Jennifer Kwan
 TORONTO, July 10 (Reuters) - The Canadian dollar weakened
against the U.S. currency on Friday, logging its fourth
straight week of declines, as commodity prices sagged on
uncertainty about a global economic recovery and economic data
came in mixed.
 In choppy action, the currency rallied as high as C$1.1615
to the U.S. dollar, or 86.10 U.S. cents, shortly after data
showed fewer Canadians lost their jobs in June than expected.
 But it quickly relinquished all its gains and turned lower
against the greenback, partly because the jobs report revealed
that the only strength came from part-time employment and that
recession still gripped the economy.
 The currency was kept lower as trade data showed plunging
energy and autos exports pushed Canada to its largest trade
deficit ever in May at C$1.42 billion, widening from a deficit
of C$389 million in April. [ID:nN10501985]
 Adding to the mix was a survey on Friday that showed the
mood of U.S. consumers had soured in early July on persistent
worries about jobs. [ID:nN10403474]
 "It continues to be doubts over the global economic picture
and just how close the economy, particularly in North America,
is to a recovery," said Peter Buchanan, senior economist at
CIBC World Markets.
 The Canadian currency finished at C$1.1647 to the U.S.
dollar, or 85.86 U.S. cents, down from C$1.1623 to the U.S.
dollar, or 86.04 U.S. cents, at Thursday's close. The unit was
down 0.26 percent for the week, its fourth straight weekly
 The currency was also pressured by weak commodity prices,
often key drivers of the Canadian dollar given the nature of
the country exports.
 Oil prices settled below $60 a barrel in their biggest
weekly decline since late January as traders focused on
economic uncertainty and the outlook for demand. [ID:nSP476597]
Gold and base metals also sagged. [ID:nLA430812]
 In recent sessions, there has been some inter-day movement
but the currency has largely opened and closed at similar
levels, said Brendan McGrath, senior foreign exchange trader at
Custom House.
 "This is just a sign of uncertainty," he said.
 Bond prices were largely higher across the curve as
investors sought assets perceived to be safer, following the
bigger U.S. Treasury market higher as the consumer confidence
reading intensified doubts a about quick economic recovery.
 "People are a little more concerned with the security of
their holdings so that makes government debt more appealing,"
said Buchanan.
 The two-year Canada bond was up 3 Canadian cents at
C$100.16 to yield 1.163 percent, while the 10-year bond climbed
25 Canadian cents to C$103.95 to yield 3.278 percent.
 The 30-year bond was up 20 Canadian cents to C$119.30 to
yield 3.863 percent. In the United States, the 30-year bond
yielded 4.1925 percent.
 Canadian bonds mostly underperformed U.S. issues across the
curve. The Canadian 30-year bond was 33 basis points below the
U.S. 30-year yield, compared with about 43 basis points below
on Thursday.
 (Reporting by Jennifer Kwan; editing by Rob Wilson)

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