Thursday September 17, 2009 - 21:21:25 GMT
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Reuters - www.reuters.com
Forex Market News - CANADA FX BONDS-C$ drops along with oil and stocks, bonds up
Thu Sep 17, 2009 5:05pm EDT
* Hits high of 94.42 U.S. cents, reverses
* Bonds higher as equity markets fall
(Updates prices, adds commentary)
By Ka Yan Ng
TORONTO, Sept 17 (Reuters) - The Canadian dollar retreated
from an 11-month high against a generally lower U.S. currency
on Thursday, breaking a two-day climb.
The currency hit the high -- C$1.0591 to the U.S. dollar,
or 94.42 U.S. cents -- in the morning as the price of oil and
equity markets strengthened. But as those two supports reversed
course as the day wore on, so did the Canadian dollar.
The price of oil settled little changed, while U.S. and
Canadian equity markets closed lower after several days of
gains. Gold prices also came off an 18-month high. The currency
often tracks the direction of these markets, reflecting the
country's resource-based economy.
Jack Spitz, managing director of foreign exchange at
National Bank Financial, said there was no clear signal from
these correlated markets to indicate a change in sentiment for
the Canadian dollar, which is considered a riskier currency
than the greenback.
"There is no clear indication that risk appetite has
changed," he said.
"There's consolidation here in and around the low end of
the two-month range that's existed," Spitz added. "That being
said, we have printed a fresh calendar high for the Canadian
dollar...while significant, there's still been no
sustainability to the move."
The Canadian dollar finished at C$1.0668 to the U.S.
dollar, or 93.74 U.S. cents, down from Wednesday's close at
C$1.0649 to the U.S. dollar, or 93.91 U.S. cents.
Data released on Thursday morning showed Canadian consumer
prices fell by 0.8 percent in August from a year earlier, the
second-biggest 12-month drop in more than 50 years. Core
inflation ticked up 0.1 percent from July and 1.6 percent
The report was largely in line with expectations and had
little effect on the currency.
BONDS TURN HIGHER
Canadian bond prices moved higher across the curve,
rebounding from recent weakness as stocks succumbed to
profit-taking and concern mounted that the stock market rally
has gone too far too fast.
The two-year bond CA2YT=RR inched up 3 Canadian cents to
C$99.48 to yield 1.270 percent, while the 10-year bond
CA10YT=RR rose 20 Canadian cents to C$103.20 to yield 3.360
percent. The 30-year bond CA30YT=RR was up 10 Canadian cents
at C$118.90 to yield 3.880 percent.
Canadian bonds mostly underperformed their U.S.
counterparts, except in the three-year maturity. The Canadian
10-year bond yield moved to 2.7 basis points below its U.S.
counterpart, compared with 9.1 basis points on Wednesday.
(Editing by Peter Galloway
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