February 25, 2010 / 3:00 PM / in 10 years

CANADA FX DEBT-C$ hits 2-week low on Greece fears, U.S. data

 * C$ dips to 93.72 U.S. cents
 * Bonds higher on risk aversion
 By Claire Sibonney
 TORONTO, Feb 25 (Reuters) - The Canadian dollar slumped to
a two-week low against the U.S. dollar on Thursday as investors
flocked to the greenback and other safe havens due to worries
about possible downgrades to Greece's sovereign debt and soft
U.S. economic data.
  Credit agency Standard & Poor's said on Wednesday it may
downgrade Greece's BBB-plus rating by one or two notches within
a month, citing downside risks to growth that could hinder the
country's deficit-cutting plan. [ID:nLDE61N2KL]
 Moody's Investors Service also said Athens would need to
enact its fiscal reform plans as promised if it was to avoid a
downgrade and Fitch Ratings said that, barring surprises, it
expected to keep its BBB-plus rating unchanged for the next few
months. [ID:nTOE61O07C] [ID:nLAG006125]
 "It keeps sovereign debt concerns on the radar screen,"
said Matthew Strauss, a senior currency strategist at RBC
Capital Markets.
 "It keeps the Greece situation alive and very much
affecting the markets."
 On the data front, the number of U.S. jobless claims rose
unexpectedly in the latest week, while U.S. durable goods
orders excluding transportation fell in January.
 Equity markets and commodities prices, which often
influence the Canadian currency, were also reeling from
risk-off trade.
 Oil fell below $80 a barrel, dragged lower by a rise in the
dollar as the euro slid on concerns over the outlook for the
European economy, while gold retreated from the $1,100 an ounce
level. [O/R] [GOL]
 At 9:26 a.m. (1426 GMT), the Canadian dollar was at
C$1.0670, or 93.72 U.S. cents, down from Wednesday's close of
C$1.0540 to the U.S. dollar, or 94.88 U.S. cents.
 With equity markets lower, Canadian bond prices were higher
across the curve, as investors flocked to the safety of
government debt.
 The two-year Canadian government bond CA2YT=RR added 9
Canadian cents to C$100.405 to yield 1.294 percent, while the
10-year bond CA10YT=RR rose 42 Canadian cents to C$102.770 to
yield 3.398 percent.
 (Reporting by Claire Sibonney; editing by Peter Galloway)

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