November 12, 2009 / 2:34 PM / 11 years ago

CANADA FX DEBT-C$ falters on reduced risk appetite, bonds flat

 * C$ slips to 95.28 U.S. cents
 * Bonds flat ahead of C$3 bln auction of two-yr notes
 TORONTO, Nov 12 (Reuters) - Canada’s currency slipped from a three-week closing high on Thursday as lighter risk appetite was reflected in softer equity markets and commodity prices.
 The Canadian dollar, without much domestic news to sustain influence, was likely to take direction from moves in other currencies, such as the euro that failed to cement a break above the key $1.50 level.
 Market watchers were also considering a meeting of Asia-Pacific leaders and other Asian regional issues, including a visit to China next week by U.S. President Barack Obama.
 The latest draft of a post-meeting communique from APEC finance ministers called for “market-oriented” exchange rates and interest rates — effectively an argument for local currencies to appreciate against the U.S. dollar. [ID:nSP423373] [FRX/]
 Gold prices eased from record highs as the U.S. dollar recovered, while oil prices were also lower ahead of a key U.S. crude stocks report. Both commodities are key Canadian exports and their prices often influence the direction of the Canadian dollar. [GOL/] [O/R]
 The lower commodity prices were likely to weigh on Toronto’s main stock index, while retail giant Wal-Mart (WMT.N) forecast earnings for the crucial holiday quarter could miss estimates as its customers face rising unemployment.
 “Market attention seems to be diverted on two issues: comments out of the People’s Bank of China...and gold, which continues to drive towards new highs,” said Jack Spitz, managing director of foreign exchange at National Bank of Canada.
 “As far as dollar/Canada is concerned, it’s just following the broader flow in currency markets.”    
 At 9:10 a.m. (1410 GMT), the Canadian dollar was at C$1.0495 to the U.S. dollar, or 95.28 U.S. cents, down from C$1.0461 to the U.S. dollar, or 95.59 U.S. cents, at Wednesday’s close, its highest close since Oct. 21.
 Overnight, the currency had slipped as low as C$1.0548 to the U.S. dollar, or 94.80 U.S. cents.
 It pared losses after data showed new home prices in Canada rose by a sharper-than-expected 0.5 percent in September from August. [ID:nOTT003772]
 Canadian bonds were little changed across the curve ahead of new supply and despite the weaker tone to equity markets.
 The two-year bond CA2YT=RR was down 2 Canadian cents at C$99.67 to yield 1.415 percent, while the 10-year bond CA10YT=RR fell 9 Canadian cents to C$101.88 to yield 3.516 percent.
 There is a C$3.0 billion auction of new two-year bonds at noon (1700 GMT).
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)                                                  

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