November 17, 2011 / 1:18 PM / 9 years ago

REFILE-CANADA FX DEBT-C$ slips for 4th day, Spanish yields jump

  (Fixes to "U.S." dollar in first paragraph)
 * C$ at C$1.0264 vs US$, or 97.43 U.S. cents
 * Bond prices flat to higher across curve
 By Claire Sibonney
 TORONTO, Nov 17 (Reuters) - The Canadian dollar eased for a
fourth straight day against the U.S. dollar on Thursday as
surging yields at a Spanish bond auction stoked fears about
contagion of the euro zone's debt problems.
 Spain paid more to sell 10-year government bonds than at
any time since 1997, when it still used the peseta, while a
separate auction saw two- and four-year borrowing costs for
AAA-rated France jump by around half a percentage point.
 The auctions were held at a critical time, with the debt
crisis threatening to ensnare France and other core euro zone
economies like the Netherlands and Finland.
 "The story is the same story that it's been all week. The
story is basically Europe and it's headline driven," said
Michael O'Neill, vice-president of FX Trading at RJOFX Canada.
 At 7:55 a.m. (12:55 GMT), the Canadian dollar  CAD=D4
stood at C$1.0264 against the U.S. dollar, or 97.43 U.S. cents,
down from Wednesday's North American session close at C$1.0229
against the U.S. dollar, or 97.76 U.S. cents.
 "We're starting to look like we're breaking resistance in
the C$1.0250-60 level but it's still the skinny time of the
day," added O'Neill. "Risk-reward now favors a weaker Canada
testing C$1.0320."
 Investors will eye data on U.S. housing, jobless claims and
Canadian securities transactions at 8:30 a.m. for further
direction, as well as the Philadelphia Fed's business activity
report later in the morning.
 Canadian government bond prices were little changed across
the curve. The two-year bond CA2YT=RR rose 1 Canadian cent to
yield 0.889 percent, while the 10-year bond CA10YT=RR eased 5
Canadian cents to yield 2.105 percent.
 (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)

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