Reuters: US Dollar Report: CANADA FX DEBT-C$ hits 6-mth low, bond yields sink to record

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CANADA FX DEBT-C$ hits 6-mth low, bond yields sink to record Jun 1st 2012, 13:32 Fri Jun 1, 2012 9:32am EDT * C$ hits 6-mth low of C$1.0443 vs US$, or 95.76 U.S. cents * Bond yields tumbled to record lows after weak U.S., Canada data * Traders raise bets of Bank of Canada rate cut by end of 2012 By Claire Sibonney TORONTO, June 1 (Reuters) - The Canadian dollar hit its weakest level in six months on Friday and longer-term bond yields tumbled to record lows as investors scrambled away from riskier trades after weak North American data added to mounting concerns about faltering global growth. Canada's dollar touched a low of C$1.0443 against the greenback, or 95.76 U.S. cents, its softest level since late November after the U.S. nonfarm payrolls report showed job growth in May was the weakest in a year. The commodity-linked currency was also hurt by data that showed the Canadian economy grew less in the first quarter than the Bank of Canada had expected. "You got a double whammy. There goes (Bank of Canada Governor) Mr. Carney's upbeat Canadian scenario," said John Curran, senior vice president at CanadianForex. Speculation of a hike in interest rates had heated up after the central bank used unexpectedly hawkish language in its April 17 policy statement, but the flare-up of the European debt crisis and some tepid U.S. data have since cast doubt on any plans to tighten monetary policy. Following Friday's data, traders in fact raised bets of an interest rate cut by the end of the year. "The bottom line here is that there's no way the Bank of Canada is moving this year, in my opinion," said Derek Holt, vice president of economics at Scotiabank. "Not just on geopolitical risks but also on growth disappointments on the domestic side of the picture, which adds a new twist to the policy risks in Canada." The North American data provided a fresh blow to investors already concerned about the global growth outlook. Earlier in the session, the Canadian dollar was already in negative territory, tracking world stocks as they dropped toward 2012 lows and U.S. Treasury yields, which hit their lowest in hundreds of years as euro-zone debt signals flashed red again and Chinese demand was seen slowing. At 9:10 a.m. (1310 GMT), the Canadian dollar was at C$1.0411 versus the U.S. dollar, or 96.05 U.S. cents, down from Thursday's North American session close at $1.0329 against its U.S. counterpart, or 96.81 U.S. cents. Canadian government bond prices climbed across the curve, sending longer-dated yields to record lows for another day. Canada's benchmark 10-year bond yield hit a record trough of 1.640 percent, while the 30-year yield touched a record low of 2.222 percent. The yield on the two-year bond, especially sensitive to Bank of Canada thinking, marked its lowest level since January at 0.936 percent. Link this Share this Digg this Email Reprints

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