CANADA FX DEBT-C$ hits 7-month low as growth fears hurt commodities
* C$ at C$1.0187 versus US$, or 98.16 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. The currency fell for a fifth straight day, as investors have drilled in on a string of dismal recent data releases that paint a drab picture of the domestic economy. "We've had a weakening in the domestic data that has now started to weigh a little bit more on the Canadian dollar," said Mazen Issa, a macro strategist at TD Securities, who said this was a change from 2012 currency moves driven by fluctuating appetite for risk. Worries about weak economic growth in Europe and the United States also hurt global stock markets, with the greenback benefiting from its status as a safe haven and the U.S. Federal Reserve hinting 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. The Canadian dollar ended the session changing hands at at C$1.0187 to the greenback, or 98.16 U.S. cents, compared with C$1.0173, or 98.30 U.S. cents, at Wednesday's North American close. It hit C$1.0208 at one point. "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 seven-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 and slower factory activity and consumer price inflation. 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 28 Canadian cents to yield 1.982 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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