Reuters: US Dollar Report: CANADA FX DEBT-C$ weakens to 2-month low as rate hike less imminent

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CANADA FX DEBT-C$ weakens to 2-month low as rate hike less imminent Jan 24th 2013, 13:43 Tweet Share this Email Print Thu Jan 24, 2013 8:43am EST * C$ at C$1.0019 to US$, or $0.9981 * Rate hike delay, risk aversion hurts currency By Alastair Sharp TORONTO, Jan 24 (Reuters) - The Canadian dollar weakened to a two-month low on Thursday, sticking below equal value with its U.S. counterpart, a day after the Bank of Canada said an interest rate hike was less imminent. The currency plunged nearly three quarters of a cent on Wednesday after the country's central bank said excess capacity in the economy, soft inflation and stabilizing household debt had combined to push any rate increase further away than previously thought. But Adam Cole, Royal Bank of Canada's London-based global head of foreign exchange strategy, said the continued weakness was also related to a feeling of global economic malaise. "The rally in dollar/Canada is as much about the markets being slightly negative for risk today as it is about Canada's domestic story," he said. At 8:14 a.m. (1314 GMT) the Canadian dollar was trading at C$1.0019 to the greenback, or $0.9981, compared with C$0.9990, or $1.0010, at Wednesday's North American close. The currency at one point hit C$1.0025, its weakest since Nov. 16. The Australian dollar, another currency generally seen as a proxy for risk appetite, pared its Wednesday gains against the Canadian dollar. Cole said that the Canadian dollar would likely soon bounce back above U.S. dollar parity again as risks abate in the euro zone and China shows further signs of improving growth. Investors will also closely follow the progress of U.S. politicians as they negotiate deals on spending cuts and debt expansion in coming months, he said. The currency would likely trade between C$0.9900 and the mid-November high of C$1.0060 to the U.S. dollar in coming days, Cole said. The price of the two-year bond was up 3 Canadian cents to yield 1.111 percent, while the benchmark 10-year bond rose 21 Canadian cents to yield 1.854 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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