October 21, 2010 / 8:32 PM / 10 years ago

CANADA FX DEBT-C$ lower as greenback gains; commodities weigh

   * C$ ends at 97.44 U.S. cents
 * Bond prices mixed across curve
 * G20 finance and central bankers weekend meeting in focus
 (Updates to close, adds quote)
 By Jennifer Kwan
 TORONTO, Oct 21 (Reuters) - The Canadian dollar ended lower
against a rebounding U.S. currency on Thursday, reversing
earlier gains, as the appetite for risk faded on stock markets
and commodity prices fell.
 The U.S. dollar rebounded in volatile trade after the euro
failed again to hold above $1.40 and as investors turned
cautious before a G20 finance ministers meeting this weekend.
 Investor focus was on the Friday and Saturday meetings of
Group of 20 finance and central bank chiefs in South Korea.
They are expected to try to reach agreement on a common path to
manage currency, trade and macroeconomic imbalances.
 "The volatility speaks to the friction that exists in the
marketplace," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
 "That friction is not limited to traders but also held by
central bankers themselves. As they meet this weekend to
discuss the potential for currency accord, the market itself is
still undecided as to whether any success is going to be
 "That uncertainty is playing out with respect to the
volatility being seen in the currencies."
 The Canadian dollar CAD=D4 finished at C$1.0263 to the
U.S. dollar, or 97.44 U.S. cents, well off its earlier high at
98.36 U.S. cents, and below Wednesday's finish at C$1.0222 to
the U.S. dollar, or 97.83 U.S. cents.
 Earlier, the currency had a firmer tone against its U.S.
counterpart as world stocks and U.S. equity futures ticked
higher and the U.S. dollar came under broad selling pressure.
 But Toronto's main stock index was lower at midafternoon,
as were U.S. stock indexes, which managed to eke out gains at
the close.
 As well, the price of oil, often a driver of the Canadian
dollar, was off 2 percent to settle around $80 a barrel,
dragged lower by the stronger greenback, while gold and base
metal prices also sank. [O/R] [GOL/] [MET/L]
 Canadian bond prices were mixed across the curve, with
lower prices at the short end and higher prices at the long
end, said Sheldon Dong, fixed income analyst at TD Waterhouse
Private Investment.
 Typically, such a flattening pattern would suggest
investors think that the longer-term bonds are inexpensive
relative to the shorter-term issues, said Dong, but adding he
wouldn't read too much in the day's action.
 "I think the markets are just gyrating. It's just market
noise more than anything. Yesterday, Canada pretty much
unperformed the U.S. because of all the new primary issuance. I
think today is a correction of that activity," he said.
 The two-year bond CA2YT=RR was down 4 Canadian cents to
yield 1.396 percent, while the 30-year bond CA30YT=RR gained
25 Canadian cents to yield 3.454 percent.
 (Additional reporting by Ka Yan Ng; editing by Rob Wilson)

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