Thursday September 24, 2009 - 21:43:03 GMT
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Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-C$ ends lower, nears 3-week low
Thu Sep 24, 2009 4:58pm EDT
* C$ hits lowest level in nearly 3 weeks
* Dropping oil prices and equities blamed for fall
* Bond prices finish higher across curve
By Frank Pingue
TORONTO, Sept 24 (Reuters) - Canada's currency retreated
sharply versus the U.S. dollar on Thursday, touching its lowest
level in nearly three weeks, as a pullback in oil prices and
equities spoiled investor appetite for riskier assets.
The move was compounded by a stronger greenback, which rose
on its safe-haven allure after U.S. data showed a surprise drop
in sales of existing homes in August and hinted at a less than
vigorous pace of economic recovery. [ID:nN24343088]
At mid-afternoon, the Canadian dollar dropped as low as
C$1.0949 to the U.S. dollar, or 91.33 U.S. cents, its lowest
level since Sept. 4.
"It really got hit with the ugly stick today," said Steve
Butler, director of foreign exchange trading at Scotia Capital.
"You just can't fight it on a day like today when we've had a
really healthy correction."
The currency faced pressure from oil prices that dropped
more than 4 percent to below $66 a barrel. [O/L] Canada is a
major oil exporter and its currency often moves in line with
prices for the commodity.
North American equities also ended lower, with the Toronto
stock market's S&P/TSX composite index .GSPTSE sliding 2
percent to its lowest close in nearly two weeks.
The Canadian dollar later moved off its session low but
still ended down for the session, closing at C$1.0890 to the
U.S. dollar, or 91.83 U.S. cents, down from C$1.0751 to the
U.S. dollar, or 93.01 U.S. cents, at Wednesday's close.
Butler said news that some central banks, including the
U.S. Federal Reserve, pared back emergency lending facilities
also helped to pull the rug from under the Canadian currency.
The Bank of Canada said on Tuesday it would scrap two
special lending facilities at the end of next month because of
"improved conditions" [ID:nN22363926].
BOND PRICES END HIGHER
Canadian bond prices ended a touch higher across the curve,
mirroring a move in the bigger U.S. Treasuries market, after
the U.S. home sales data.
"We just followed the U.S., but the gains on the bond
market weren't anything spectacular," said Sheldon Dong, fixed
income analyst at TD Waterhouse Private Investment.
Dong also said the Bank of Canada's C$3 billion auction of
2 percent Government of Canada bonds due Dec. 1, 2014 attracted
fairly solid demand. [ID:nTOR005004]
The two-year bond CA2YT=RR ended up 1 Canadian cent at
C$99.49 to yield 1.271 percent, while the 10-year bond
CA10YT=RR rose 15 Canadian cents to C$102.90 to yield 3.395
The 30-year bond CA30YT=RR gained 45 Canadian cents to
C$118.45 to yield 3.903 percent.
Canadian bonds outperformed their U.S. counterparts across
much of the curve. The Canadian 30-year bond was 27.2 basis
points below the U.S. 30-year yield, versus 26.6 basis points
(Editing by Peter Galloway)
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