January 20, 2011 / 1:19 PM / 9 years ago

CANADA FX DEBT-C$ at 2-week low after China growth prompts fears

 * C$ back below parity, hits low of 99.93 U.S. cents
 * Bonds weaker across the curve
 * China GDP hits 9.8 percent in Q4
 By Claire Sibonney
 TORONTO, Jan 20 (Reuters) - The Canadian dollar fell back
below parity against the greenback to its lowest in more than
two weeks on Thursday, as riskier assets pulled back after
stronger-than-expected Chinese growth data spurred fears of
tighter monetary policy.
 Chinese growth soared past forecasts to rise by 9.8 percent
and inflation slowed less than expected in the fourth quarter,
prompting a sell-off in global equities and commodities, such
as oil, which hurt Canada's resource-linked currency.
 The Canadian dollar CAD=D4 hit a low of C$1.0007 against
its U.S. counterpart, or 99.93 U.S. cents -- its softest level
since Jan. 5.
 The currency's sustained run above a one-for-one footing
with the U.S. dollar was faltering for the third day after this
week's dovish language by the Bank of Canada raised some doubts
about the timing of the next interest rate hike.
 "We've seen a significant move in the interest rate spreads
between Canada and the U.S. and that combined with fears over
Chinese tightening monetary policy and how that would impact
growth and commodities is weighing on the Canadian dollar this
morning," said Camilla Sutton, chief currency strategist at
Scotia Capital.
 "Reasonably, we're hovering either side of parity for the
next little bit as we await the next catalyst to take Canada
another leg stronger."
 At 8:10 a.m. (1310 GMT), the currency stood at C$0.9996 to
the U.S. dollar, or $1.0004, down from Wednesday's North
American finish of C$0.9955 to the U.S. dollar, or $1.0045.
 On the data front Thursday, investors will look to domestic
wholesale sales figures, as well as U.S. jobless claims,
existing home sales and leading indicators on both sides of the
  Canadian government bond prices also fell across the
curve. The two-year bond CA2YT=RR was down 2 Canadian cents
to yield 1.704 percent, while the 10-year bond CA10YT=RR lost
13 Canadian cents to yield 3.254 percent.
 (Reporting by Claire Sibonney)

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