May 12, 2011 / 12:26 PM / in 9 years

CANADA FX DEBT-C$ tripped up by commodity rout

 * C$ slips to C$0.9657 to the U.S. dollar, or $1.0355
 * Bond prices pick up in safety bid
 TORONTO, May 12 (Reuters) - The Canadian dollar fell
against the U.S. currency on Thursday, tripped up again by a
deepening commodities sell-off.
 Another wave of selling hit the commodity complex, with oil
-- a key driver for the commodity-linked Canadian currency,
extending the previous session's decline and other key
commodities such as silver and copper were also steeply lower.
 The latest commodity rout was prompted by concerns of a
weaker global outlook, particularly about the extent to which
the Chinese economy may cool even as inflation remains high.
 China increased its reserve requirement ratio for
commercial banks for the eighth time since October on Thursday,
extending its campaign to calm prices. [ID:nL3E7GC287]
 Persistent speculation about a possible Greek debt
restructuring also kept risk appetite volatile.
 "Given the global backdrop, it's no surprise to see the
Canadian dollar as a weaker performer. But it has company. It's
weak along with other commodity currencies and actually
outperforming the Australian dollar," said Jack Spitz, managing
director of foreign exchange at National Bank Financial.
 At 8:10 a.m. (1410 GMT), the Canadian dollar CAD=D4 was
at C$0.9657 to the U.S. dollar, or $1.0355, down from C$0.9611
to the U.S. dollar, or $1.0405, at Wednesday's North American
session close.
 Canadian bond prices edged up as the relative safety of
government debt was more alluring in the face of weakening
commodity prices and an exit from equity markets.
 Closely watched U.S. retail sales and initial jobless
claims data due later in the day may provide short-term
direction for markets.
 A weak reading in jobless claims after a surprise surge in
initial claims to an eight-month high in the previous week
could stoke worries the job market recovery may be losing
 Canada's two-year bond CA2YT=RR climbed 3 Canadian cents
to yield 1.685 percent, while the 10-year bond CA10YT=RR rose
12 Canadian cents to yield 3.209 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)

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