CANADA FX DEBT-C$ hits 7-mth low as growth fears hurt commodities
* C$ at C$1.0189 versus US$, or 98.15 U.S. cents * Greenback exhibits broad strength as risk appetite wanes * Commodity price fall hurts C$, equity markets add pressure By Alastair Sharp TORONTO, Feb 21 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday, breaking through C$1.02 to the greenback for the first time since July, as fears about global growth hit commodity prices and related currencies. Worries about Europe's economic health also hurt global stock markets, with the greenback benefiting from its status as a safe haven and the U.S. Federal Reserve hints at an eventual tightening of its accommodative monetary policy. "Equity markets are coming under pressure, commodities are being heavily sold, and that's making its way into the currency markets as well," said Blake Jespersen, a managing director of foreign exchange sales at BMO Capital Markets. At 9:20 a.m. (1420 GMT) the Canadian dollar was trading at C$1.0189 to the greenback, or 98.15 U.S. cents, compared with C$1.0173, or 98.30 U.S. cents, at Wednesday's North American close. "The Canadian dollar should outperform some of the majors but against the U.S. dollar it is still a weakening story," Jespersen said, suggesting the pair could test C$1.03 in coming weeks. The loonie, as Canada's currency is colloquially known, hit its strongest level against the British pound since September 2011 after the Bank of England looked set to loosen monetary policy. It also firmed against the euro. But like its Australian counterpart, which is also heavily influenced by commodity markets, it weakened against the greenback. Oil prices hit a three-week low and gold recovered only slightly off 7-month lows. The global appetite for riskier assets weakened on data showing European business activity had shrunk and a bigger-than-expected rise in weekly U.S. jobless claims. The price of a two-year Canadian government bond was up 3 Canadian cents to yield 1.108 percent, while the benchmark 10-year bond rose 27 Canadian cents to yield 1.983 percent. The spread between Canadian and U.S. 2-year government bond yields was near its year-to-date low of 85 basis points on Thursday, down from 95 basis points seen in early January. Analysts said this has been a factor reducing the appeal of Canadian debt for many international investors.
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