Reuters: US Dollar Report: CORRECTED-CANADA FX DEBT-C$ slips vs US$, hits all-time high vs euro

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CORRECTED-CANADA FX DEBT-C$ slips vs US$, hits all-time high vs euro Jul 23rd 2012, 17:38 Tweet Share this Email Print Mon Jul 23, 2012 1:38pm EDT (Corrects fifth paragraph to show Murcia has not sought aid) * C$ at C$1.0176 vs US$, or 98.27 U.S. cents * C$ hits record high versus euro * Bond prices advance across the curve By Claire Sibonney TORONTO, July 23 (Reuters) - The Canadian dollar eased to a more than one-week low against its U.S. counterpart but climbed to an all-time high versus the euro on Monday as investors fled riskier assets on fears that Spain will not be able to avoid a costly sovereign bailout. Spanish bonds yields soared to their highest levels since creation of the euro, despite euro zone finance ministers approving on Friday terms for a loan of up to 100 billion euros for Madrid to recapitalize its banks. Analysts said this was the prime driver of the euro's fall. The euro hit a two-year low against the U.S. dollar and a record trough versus Canada's currency at C$1.2280, or 81.43 U.S. cents. "Euro/CAD still looks attractive to sell because the problems in the euro zone are much more deep-seated and structural and symptomatic about broader uncertainties within the whole ... single currency area," said Jeremy Stretch, head of currency strategy at CIBC in London. Murcia looked on course to bec o me the second Spanish region to request financial assistance from the government, after Valencia, with media reports suggesting six regions could seek aid. Against the greenback, the Canadian dollar slipped to its lowest level since July 13, tracking global equities and oil prices down in the absence of any major economic data. [MKTS/GLOB[ At 8:17 a.m. (1217 GMT), Canada's currency was at C$1.0176 versus its U.S. counterpart, or 98.27 U.S. cents, down from Friday's North American session close of C$1.0127 against the U.S. dollar or 98.75 U.S. cents. Stretch noted however that the Canadian dollar still remained supported by a combination of positive factors, including the tightening bias of the country's central bank. Most Canadian primary dealers expect the Bank of Canada to start raising interest rates again by mid-2013, even as its struggling peers remain in easing mode. "Also the relative fiscal position looks much more attractive than elsewhere, there isn't any real political uncertainty and I think that's one of the problems that continues to afflict a number of jurisdictions is the inability of politicians to actually take decisions," added Stretch. Stretch said a close stronger than the 200-day moving average of C$1.0108 would encourage the Canadian dollar environment a bit more, while the 50-day moving average at C$1.0222 was an area to watch on the topside. Canadian bond prices edged higher across the curve, with the two-year government bond adding 6 Canadian cents to yield 0.924, while the benchmark 10-year bond CA2YT=RR gained 43 Canadian cents to yield 1.568 percent. (Reporting by Claire Sibonney; Editing by Theodore d'Afflisio) Tweet this Link this Share this Digg this Email Reprints Comments (0) Be the first to comment on reuters.com. Add yours using the box above.

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