Reuters: US Dollar Report: CANADA FX DEBT-C$ slips with investors nervous ahead of Fed

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CANADA FX DEBT-C$ slips with investors nervous ahead of Fed Aug 30th 2012, 19:39 Tweet Share this Email Print Thu Aug 30, 2012 3:39pm EDT * C$ slips to C$0.9925 vs US$, or $1.0076 * Bond prices climb across the curve * Fed's Bernanke not expected to offer stimulus details * Current account deficit widens more than expected By Solarina Ho TORONTO, Aug 30 (Reuters) - The Canadian dollar retreated against the U.S. currency on Thursday, tracking losses in global stock markets and commodity prices, as investors pared back expectations that the Federal Reserve will signal a new round of economic stimulus. Fed Chairman Ben Bernanke will be giving a much anticipated speech at a meeting of central bankers in Jackson Hole, Wyoming, on Friday, but expectations are low he will offer market-moving news of a third round of economic stimulus. Canadian and U.S. shares fell alongside other riskier assets as investors closed out positions ahead of Bernanke's speech. "There's just some risk-shedding ahead of the announcement that Bernanke's going to do tomorrow," said John Curran, senior vice president at CanadianForex. "I really don't think there's going to be any great surprises. I don't think they're going to announce any grand scheme." Curran said the speech, a European Central Bank meeting next week and the coming long weekend are all combining to prompt investors to pull some risk off the table. The ECB is expected to unveil concrete plans to help crimp crippling borrowing costs in Spain and Italy at a policy meeting on Sept. 6. The euro zone has been trying to tackle the region's three-year-old debt crisis. At 3:05 p.m. ET (1905 GMT), the Canadian dollar stood at C$0.9925 versus the greenback, or $1.0076, down from Wednesday's close at C$0.9895 against the U.S. unit, or $1.0106. CURRENT ACCOUNT WIDENS The currency barely moved after a report showed Canada's current account deficit widened more than expected in the second quarter, mainly due to lower exports of energy and a higher level of imports. But the report served as a reminder that the Canadian dollar's recent strength is mainly due to capital and not trade-related flows, leaving it vulnerable to capital flight if global worries re-emerge, CIBC World Markets' Emanuella Enenajor wrote in a note. Canada's dollar weakened against most other major currencies such as the euro. But it did firm to a 2-1/2 month high against the Australian dollar, which was also hurt by falling commodity prices. Also expected tomorrow are a laundry list of economic data from the U.S. and second quarter GDP numbers for Canada, which are projected to be soft. Canadian bond prices crept up across the curve, with the two-year bond up 2.5 Canadian cents to yield 1.128 percent and the benchmark 10-year bond up 36 Canadian cents to yield 1.762 percent. 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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