September 12, 2011 / 12:22 PM / 9 years ago

CANADA FX DEBT-C$ hits 7-1/2 mth low on Greece default fears

 *C$ hits Jan. low below parity against greenback
 *C$ rallies to July high versus euro
 *Bond prices rally across curve
 By Claire Sibonney
 TORONTO, Sept 12 (Reuters) - The Canadian dollar fell below
parity against the U.S. dollar on Monday to its weakest level
in more than seven months as risk sentiment continued to
deteriorate on growing fears of a Greek default.
 Canada's dollar CAD=D4 fell as low as C$1.0016 to the
greenback, or 99.84 U.S. cents, its weakest level since Jan.
 Against the euro however, the  Canadian dollar climbed to
C$1.3495, or 74.10 euro cents, its strongest level since
 Meanwhile, the euro tumbled to a 10-year low against the
yen as investor confidence in the currency bloc's ability to
surmount a sovereign debt crisis ebbed and worries turned to
contagion in the region's banking system and larger economies.
 "The market as we know turns to the U.S. dollar in times of
dire stress and with that we've seen the U.S. dollar continue
to push stronger," said Steve Butler, director of foreign
exchange trading at Scotia Capital.
 The Canadian dollar was still hanging in relatively well,
he noted, outperforming the euro as well as other commodity
currencies such as the Australian and New Zealand dollars.
 "At the end of the day, Canada is still in a better
situation than most and although our jobs number wasn't great
on Friday it wasn't terrible either."
 Risk aversion was further exacerbated by the failure of the
weekend's meeting of finance ministers from the Group of Seven
industrialized nations to come up with any fresh proposals for
boosting global growth. [ID:nN1E78728T] [ID:nL5E7KC0KE]
 At 8:01 a.m. (1201 GMT), the Canadian dollar stood at
C$1.0002 to the U.S. dollar, or 99.98 U.S. cents, down from
Friday's North American session close at C$0.9960 to the U.S.
dollar, or $1.0040.
 Butler said the C$1.0060 level hit in January should hold
in reasonably on Monday but was wary of calling the next
topside level with so much risk aversion in the market.
 He noted that more interest to buy Canadian dollars should
come in around C$1.01.
 Canadian bond prices edged higher across the curve.
 The two-year bond CA2YT=RR was up 4 Canadian cents to
yield 0.762 percent, while the 10-year bond CA10YT=RR gained
17 Canadian cents to yield 2.095 percent.
 (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)

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