November 25, 2011 / 9:55 PM / 9 years ago

CANADA FX DEBT-C$ slips past 7-week low on Italy, Belgium

 * C$ ends at C$1.0494 vs US$, or 95.29 U.S. cents
 * Touches low of C$1.0524, or 95.02 U.S. cents
 * Low level is weakest since Oct. 5
 * Canada bond prices slip across the curve
 (Updates to close, adds details)
 By Jennifer Kwan
 TORONTO, Nov 25 (Reuters) - Canada's dollar on Friday sank
to its weakest against the U.S. dollar in more than seven weeks
on growing anxiety that the euro debt crisis could lead to a
break-up of the currency bloc.
 Investors were rattled by word that Italy paid a record 6.5
percent to borrow money over six months and that its
longer-term funding costs soared. Standard & Poor's downgrade
of Belgium's credit rating to AA from AA-plus added to a
growing list of danger signals. [nL5E7MO3UP] [nN1E7AO0Y7]
 The news pushed Canadian stocks lower for a third straight
session on Friday, while global equity markets retreated on
fear that policymakers have no clear path of resolving Europe's
debt crisis. [FRX/] [MKTS/GLOB]
 "The Belgium downgrade was the key headline that drew
market attention," said Greg Moore, foreign exchange strategist
at TD Securities.
 "It added to the overall sovereign credit and bank funding
stresses that have been building over the past week. That's
just the latest symptom of the overall issues."
 The Canadian dollar CAD=D4 ended at C$1.0494 to the U.S.
dollar, or 95.29 U.S. cents, after earlier hitting a low of
C$1.0524 to the U.S. dollar, or 95.02 U.S. cents, its weakest
level since Oct. 5.
 On Thursday, the currency ended at C$1.0469 to the
greenback, or 95.52 U.S. cents.
 David Watt, senior currency strategist at RBC Capital
Markets, said trading was thin for the second day on "Black
Friday," the traditional beginning to the U.S. holiday shopping
season, following a U.S. market holiday on Thursday for
 "What we've been watching is a near unrelenting stream of
increasingly negative news. Whether it's been on the global
economy, the global outlook, what's going on in the euro zone,"
 said Watt.
 "That is basically getting markets very nervous. --
increasingly nervous."
 After breaking through C$1.0500, the next significant
support level for the Canadian dollar is seen at the year-low
of C$1.0658 against the greenback, notched in October. On the
flip side, the Canadian currency could strengthen to C$1.0361
against its U.S. counterpart, Watt said.
 Canadian government bond prices eased across the curve,
following the trend in the U.S. that saw Treasuries slip on
profit-taking after recent gains. [US/]
 "While FX markets had a clear risk tone, we're not really
seeing that passed through to other markets. Given where yields
have been we're getting a little bit of a relief in that
regard," said Watt.
Canada's two-year bond CA2YT=RR eased 8 Canadian cents to
yield 0.950 percent, while the 10-year bond CA10YT=RR was
down 53 Canadian cents to yield 2.109 percent.
 (Editing by Frank McGurty)

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