November 1, 2011 / 12:38 PM / 9 years ago

CANADA FX DEBT-C$ slides as Europe fears dominate

   * C$ hits session low of C$1.0174 vs US$ or 98.29 US cents
 * Bond prices rally across the curve
  By Claire Sibonney
  TORONTO, Nov 1 (Reuters) -  The Canadian dollar tumbled
more than two cents against the U.S. dollar on Tuesday,
slipping back below parity as fears over the euro zone debt
crisis and the collapse of broker-dealer MF Global darkened the
outlook for the global economy.
  Greek Prime Minister George Papandreou's shock
announcement on Monday that he will put Greece's bailout to a
referendum drew veiled threats from Germany on Tuesday and
hammered global stock markets edgy over the region's crisis.
 The fallout from the collapse of MF Global Holdings MF.N
also rippled through global exchanges, as operators moved to
suspend the U.S. futures broker or limit trades of its
customers.  [ID:nL4E7M10S3]
 "All the things that could go wrong for CAD are going wrong
at the same time here," said Camilla Sutton, chief currency
strategist at Scotia Capital.
 She noted that risk sentiment was also hurt by an
unexpected fall in PMI data for China's manufacturers and an
interest rate cut by the Reserve Bank of Australia.
 [ID:nL5E7M100M] [ID:nL4E7LV2ZI]
 "The spike in risk aversion is really weighing on the
near-term CAD outlook as is fears that China's growth is
slowing faster than expected and the RBA might see ... softer
growth in China."
 At 8:11 a.m. (1211 GMT), the Canadian dollar CAD=D3
stood at C$1.0149 versus the greenback, or 98.53 U.S. cents,
down from Monday's North American session finish at C$0.9967 to
the U.S. dollar, or $1.0033.
 Earlier, it sank as low as $1.0174, or 98.29 U.S. cents,
more than two cents lower than Monday's close to its weakest
level in nearly a week.
 Sutton expected the day's range for the currency to hold
between C$1.0080-C$1.0180.
  Canadian government bond prices rallied across the curve,
following U.S. Treasuries higher as investors scurried for
safer investments. [US/]
 The two-year bond CA2YT=RR rose 10 Canadian cents to
yield 0.947 percent, while the 10-year bond CA10YT=RR climbed
77 Canadian cents to yield 2.199 percent.
 (Reporting by Claire Sibonney; Editing by Theodore d'Afflisio)

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