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CANADA FX DEBT-C$ weakens to 11-day low as risk aversion rises

Published 2016-09-12, 09:20 a/m
© Reuters.  CANADA FX DEBT-C$ weakens to 11-day low as risk aversion rises
USD/CAD
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CL
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar at C$1.3110, or 76.28 U.S. cents

* Loonie touches its weakest since Sept. 1 at C$1.3123

* Bond prices lower across the maturity curve

TORONTO, Sept 12 (Reuters) - The Canadian dollar weakened to an 11-day low against its U.S. counterpart on Monday as rising risk aversion and lower oil prices weighed on the risk-sensitive commodity-linked currency.

European stocks and bonds fell in a volatile market, hit by growing concerns that global central banks' commitment to the post-crisis orthodoxy of super-low interest rates and asset purchase programs may be waning. fell after speculators delivered hefty cuts to their bullish bets last week and U.S. crude drillers added more rigs for a tenth week running. U.S. crude CLc1 prices were down 1.53 percent at $45.18 a barrel. 9:07 a.m. EDT (1307 GMT), the Canadian dollar CAD=D4 was trading at C$1.3110 to the greenback, or 76.28 U.S. cents, weaker than Friday's close of C$1.3037, or 76.70 U.S. cents.

The currency's strongest level of the session was C$1.3036, while it touched its weakest since Sept. 1 at C$1.3123.

Losses for the loonie came after a more dovish-than-expected statement from the Bank of Canada last week. on Friday showed Canada created more jobs than expected in August on increased hiring in the construction and services sectors, but the gains did not fully make up for recent declines in employment, pointing to a labor market that was struggling to gain momentum. have pared bullish bets on the Canadian dollar, Commodity Futures Trading Commission data showed on Friday. Net long Canadian dollar positions dipped to 20,905 contracts in the week ended Sept. 6 from 22,400 contracts in the prior week. government bond prices were lower across the yield curve, with the two-year CA2YT=RR bond down 1.5 Canadian cents to yield 0.591 percent and the benchmark 10-year CA10YT=RR falling 15 Canadian cents to yield 1.167 percent.

The curve steepened as the spread between the 2-year and 10-year yields widened by 0.8 of a basis point to 57.6 basis points, its widest in more than two months, indicating underperformance for longer-dated maturities.

Domestic manufacturing sales data for July is due for release on Friday. Strong sales at the start of the third quarter would likely reinforce expectations that the economy will bounce back strongly after shrinking in the second quarter. ECONCA

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