Wednesday September 10, 2008 - 20:35:55 GMT
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Reuters - www.reuters.com
Forex Market News - Canadian dollar rises on "buy North America" bid
* Currency's rise limited by slumping commodity prices
* Bond prices fall as safe-haven bid wanes on stocks rally
* Canadian productivity falls for third-straight quarter
By John McCrank
TORONTO, Sept 10 (Reuters) - The Canadian dollar rose
slightly against a generally stronger U.S. dollar on Wednesday
as investors focused on weakening growth overseas and bought
North American currencies.
Domestic bond prices fell as investors moved out of bonds
and into the more lucrative stock market.
The Canadian dollar ended the North American session at
C$1.0697 to the U.S. dollar, or 93.48 U.S. cents, up slightly
from C$1.0706 to the U.S. dollar, or 93.41 U.S. cents, at
The currency spent the day in a range of C$1.0658 and
C$1.0744. It was given a boost early in the session from firm
oil prices, but gave up most of the gains as the price of U.S.
crude oil CLc1 turned negative.
"It's (the Canadian dollar) behaving remarkably well
considering the continued sell-off in commodities," said David
Bradley, director of Foreign Exchange at Scotia Capital.
Canada is a major exporter of many key commodities, like
oil and gold <XAU=>, both of which are well off recent all-time
Bradley said some Canada merger and acquisition-related
flows may be preventing the Canadian dollar from weakening.
A stronger U.S. dollar was also seen helping the Canadian
dollar, as investors focused on a "buy North America" mode, he
While rising just marginally against the greenback, the
Canadian dollar outperformed most other major currencies.
BOND PRICES SLIP
Canadian bond prices slipped as a stock market rally took
the legs out from under the recent safe-haven bid for
"The bond market is trading off of fear right now," said
Sheldon Dong, fixed income analyst at TD Waterhouse private
"Yesterday, I think the 30-year bond yield in Canada
matched its record all-time low, so why would anyone want to
buy that bond at these levels? It's only for fear
considerations of the equity side."
On Tuesday, the Toronto Stock Exchange fell nearly 500
points, sending panicky investors out of volatile equities and
into less lucrative, but more stable, bonds.
But on Wednesday, market players snapped up stocks at low
prices, and the main TSX index climbed over 300 points.
On the domestic data front, Statistics Canada said Canadian
labor productivity declined 0.2 percent in the second quarter,
marking the longest series of consecutive quarterly declines in
productivity since 1990.
Productivity, measured as output per hour worked, fell by
0.6 percent in each of the previous two quarters.
The two-year bond fell 1 Canadian cent to C$100.09 to yield
2.710 percent, while the 10-year lost 5 Canadian cents to
C$106.50 to yield 3.455 percent.
The yield spread between the two-year and 10-year bond was
76.1 basis points, down from 76.8 basis points at the previous
The 30-year bond slid 9 Canadian cents to C$118.17 for a
yield of 3.938 percent. In the United States, the 30-year
Treasury yielded 4.212 percent.
The three-month when-issued T-bill yielded 2.41 percent,
down from 2.42 percent at the previous close.
(Reporting by John McCrank; editing by Janet Guttsman)
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