CANADA FX DEBT-C$ weakens as oil, global sentiment drag

Fri Jun 24, 2011 9:13am EDT

  
 * C$ at C$0.9804 to the U.S. dollar, or $1.0200
 * Bond prices mostly lower across curve
 By Solarina Ho
 TORONTO, June 24 (Reuters) - The commodity-linked Canadian
dollar was weaker against its U.S. counterpart on Friday,
pinched by Thursday's sharp fall in oil prices and general
concern about the health of the global economy.
 Canada, a major exporter of oil, saw its currency hit by a
surprise announcement that the International Energy Agency
would release 60 million barrels of government-held stocks over
the next 30 days in a bid to push down crude prices and
underpin the global economy.
 While the impact of the news faded, Brent crude was still
trading below $107 a barrel and U.S. crude was trading around
$91 on Friday. [O/R]
 "The two worst-performing currencies right now are the
Norwegian krone and the Canadian dollar -- the two that are
most susceptible to oil price movements -- especially downward
movements," said David Watt, senior currency strategist at RBC
Capital Markets.
 "You've also got in the background just general angst about
the global economy ... the feet-on-the-ground indicators are
that we've got a number of issues of caution," he added.
 At 8:53 a.m. (1253 GMT), the currency CAD=D4 stood at
C$0.9804 to the U.S. dollar, or $1.0200, down from Thursday's
North American finish at $0.9780 to the U.S. dollar, or
$1.0225. It had fallen to a session low of C$0.9822, or $1.0181
earlier.
 In data news, U.S. economic growth was revised modestly
higher and durable goods orders in May were also higher, but
were seen as mostly priced into the market already.
 Of key concern to the global outlook is the health of the
global factory sector, said Watt, noting that the most recent
string of data was far from encouraging. A slew of PMI indices
next week from around the world, including Canada, will offer a
better read on how the world's factory sector is performing.
 "Right now the signs are not all that encouraging. If
you're a cyclical-commodity-sensitive currency it's not the
best situation and that's pretty much what Canada is," said
Watt.
 Canadian government bond prices were mostly weaker across
the curve, mirroring the U.S. Treasury sector, where prices
fell following the gain in durable goods orders. [US/]
 The two-year bond CA2YT=RR was down 1 Canadian cent to
yield 1.449 percent, while the 10-year bond CA10YT=RR gave
back 13 Canadian cents to yield 2.917 percent.
 (Editing by James Dalgleish)






















































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