Friday October 23, 2009 - 20:42:01 GMT
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Reuters - www.reuters.com
Forex News - CANADA FX DEBT-C$ falls on weak oil, BoC warnings
* C$ finishes at C$1.0519 to the US$
* Currency down 1.3 percent for the week
* Bond prices pinned lower across the curve
(Updates to close, adds quotes)
By Jennifer Kwan
TORONTO, Oct 23 (Reuters) - The Canadian dollar sank
further against the greenback on Friday as warnings from the
Bank of Canada that the currency's strength was a risk to
economic growth weighed on investor sentiment.
On Thursday, Governor Mark Carney said in a news conference
that intervention in currency markets was an option but also
stressed the bank's main concern was controlling inflation.
That followed comments earlier in the week by the central
bank that the surging currency was undermining Canada's
economic recovery, which killed thoughts of an early interest
rate hike and raised some concerns the bank might signal it
would intervene in foreign exchange markets.
The comments sent Canada's dollar to a low of C$1.0546 to
the U.S. dollar on Friday, or 94.82 U.S. cents. It recovered
some of the losses to finish at at C$1.0519 to the U.S. dollar,
or 95.07 U.S. cents, down from C$1.0478 to the U.S. dollar, or
95.44 U.S. cents, at Thursday's close.
The Canadian dollar was down 1.3 percent for the week.
"The real driver was certainly the Bank of Canada," said
said Camilla Sutton, currency strategist at Scotia Capital.
Also tugging the currency lower was weakness in the price
of oil, a key Canadian export, which fell to around $80 a
barrel [O/R], while gold prices were also weaker. [O/R]
"Commodity currencies are generally a little bit weaker and
that's driven off equities being weaker," Sutton said.
Stock market on both side of the border sank on Friday.
Toronto stocks were dragged lower by weaker oil prices,
profit-taking and a poor outlook from fertilizer producer
Agrium Inc (AGU.TO: Quote, Profile, Research, Stock Buzz). [.TO] In the United States, the Dow
slipped below the 10,000 mark, pressured by weak results from
industrial companies. [.N]
Domestic bond prices, with no Canadian data to influence a
move, were pinned lower across the curve alongside the bigger
U.S. Treasury market, said Sheldon Dong, fixed income analyst,
at TD Waterhouse Private Investment.
U.S. Treasury debt prices eased on Friday as investors
maneuvered to cut prices ahead of next week's record-large wave
of government notes supply. [US/]
"There's going to be focus on whether there's enough buying
support for the record amounts of debt they're going to issue,"
The two-year bond CA2YT=RR fell 4 Canadian cents to
C$99.45 to yield 1.518 percent, while the 10-year bond
CA10YT=RR fell 35 Canadian cents to C$102.00 to yield 3.502
Canadian bonds mostly outperformed comparable U.S. issues.
The Canadian 2-year yield was about 50 basis points above its
U.S. counterpart, from 55 basis points on Thursday.
(Reporting by Jennifer Kwan; editing by Rob Wilson)
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