* C$ ends at C$1.0028 to US$, or 99.72 U.S. cents
* Biggest weekly drop since Dec. 12-16
* Worries over Greek debt deal rattle markets
* Bond prices higher
By Jon Cook
TORONTO, Feb 10 The Canadian dollar's
sustained run against the greenback hit a speed bump on Friday
after a key bailout deal for Greece met with fresh resistance,
putting the possibility of a disorderly default back on the
Just 24 hours after Athens agreed to tough wage and pension
cuts demanded by international lenders, the deal looked set to
collapse after euro zone leaders imposed further conditions on
Greece to receive its next rescue package and the country's
far-right leader said he could not vote in favour of the deal.
The timing was precarious, as Greece faces a deadline next
week to secure a 130 billion euro ($172.95 billion) bailout from
the International Monetary Fund and the European Union to
finance massive bond redemptions coming due in March.
The news halted the Canadian dollar's rally, knocking it
below parity with the U.S. currency and to its biggest weekly
loss this year.
"Strength for the Canadian dollar is probably capped to some
extent," said Benjamin Reitzes, senior economist and foreign
exchange strategist at BMO Capital Markets. "It's tough to see
how long that can continue for, considering the global economic
headwinds that are out there.
"There's probably more downside than upside," added Reitzes
who saw the dollar's near-term range between C$0.99 and C$1.0070
to the U.S. dollar.
The Canadian currency finished at C$1.0028 to the
U.S. dollar, or 99.72 U.S. cents, down from Thursday's close at
C$0.9956 to the U.S. dollar, or $1.0044. It was the currency's
lowest close this month the biggest weekly drop since Dec.
At one point on Friday, the currency was down nearly a cent
at C$1.0040, before rebounding slightly after a report showed
Canada's monthly trade surplus rose to a three-year high of
C$2.7 billion in December.
But it was not enough for analysts to alter their view that
Canada's economy is slowing, based on recent soft jobs, housing
and manufacturing data.
"It's really tough to see where the growth drivers are,"
said Reitzes. "Households are essentially tapped out,
governments are cutting back, business investment is largely all
imported and housing is flattening out, so what you have left is
Canada's currency has largely traded in line with the euro
for much of the year, rising above the one-to-one level with the
U.S. dollar. But the increased uncertainty over Greece had
investors selling riskier currencies and buying the U.S. dollar
"The news isn't coming out as expected, so rather than risk
some catastrophic news, take some profit on positions," said
Michael O'Neill, vice-president of foreign exchange trading at
On Thursday, optimism over a Greek debt deal and strong U.S.
jobless numbers led investors to turn their backs on the
safe-haven appeal of bonds, pushing some yields to year-to-date
highs. The 10-year yield touched a 2012 peak of 2.135 and the
30-year yield reached a high of 2.708 percent.
On Friday, bond prices snapped back across the curve with
the two-year bond climbing 4 Canadian cents to yield
1.077 percent. The 10-year bond was up 33 Canadian
cents to yield 2.054 percent.