* C$ hits low of C$0.9705 vs US$, or $1.0304,
* Oil prices tumble on demand fears
* US jobless claims surge to 8-month high
* Bond prices extend gains in flight to safety
(Updates after U.S. data)
TORONTO, May 5 (Reuters) - The Canadian dollar dropped to
its lowest level in more than two weeks against the U.S. dollar
on Thursday morning, extending its recent slide on sharply
lower prices for oil and other commodities and a surge in U.S.
Data early in the day showed the number of Americans
filing for unemployment benefits rose to an eight-month high
last week. [ID:nN05259672]
The currency was also undermined by the European Central
Bank's decision to leave interest rates unchanged and by
signals from ECB President Jean-Claude Trichet that rates are
also unlikely to be raised next month. [O/R] [ID:nLDE7440GG]
The uncertainty over rates hit the euro hard and help drag
the Canadian dollar and other risk-related currencies lower
against the safe-haven greenback and yen, said C.J. Gavsie,
managing director of foreign exchange sales at BMO Capital
"I think that this Canadian-dollar bull trend had continued
on for so much time that I'm not surprised to see a little bit
of a pullback here," he said.
Gavsie said, however, that the current commodity pullback
may be temporary. "I think that in the grand scheme of things,
commodity prices, despite being off from their highs, are still
showing signs of holding in there."
Accrding to a Reuters poll of foreign exchange strategists
released on Thursday the Canadian dollar
is set for a
gradual and modest descent over the next 12 months. But the
median forecast was that the currency will stay well above
parity with the greenback. [CAD/POLL]
At 11:33 a.m. (1533 GMT), the Canadian dollar
at C$0.9678 to the U.S. dollar, or $1.0333, down from
Wednesday's North American finish of C$0.9585 to the U.S.
dollar, or $1.0433. Earlier it fell as low as C$0.9705 to the
U.S. dollar, or $1.0304, its weakest point since April 18,
Gavsie said that after it broke through the 50-day moving
average, the next support level for the Canadian dollar is the
April 18 low of C$0.9722.
Minor Canadian economic indicators showing an unexpected
spike in March building permits and drop in the April Ivey
Purchasing Managers Index on Thursday were mostly overshadowed
by the broad exit from riskier assets. [ID:nN0796933]
Market focus is on April employment reports from the United
States and Canada.
Canadian government bond prices extended gains on Thursday,
tracking U.S. Treasuries higher in a flight to safe-haven
The two-year bond
was up 6 Canadian cents to
yield 1.655 percent, while the 10-year bond rallied
30 Canadian cents to yield 3.180 percent.
(Editing by Peter Galloway)