C$ slightly weaker on thin volume; softens after Ivey

Mon May 6, 2013 10:52am EDT
 
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By Solarina Ho

TORONTO (Reuters) - The Canadian dollar was marginally weaker against its U.S. counterpart on Monday as the U.S. dollar held firm following Friday's better-than-forecast U.S. employment data, though volumes were thin due to holidays in Britain and Japan.

The Canadian currency weakened slightly following the release of Ivey Purchasing Managers Index data that showed the pace of business purchasing slowed more severely than expected in April.

Earlier, the currency had briefly strengthened after the release of Canadian building permits data, which surged past expectations in March.

"Building permits were better than expected. I don't think you're going to see too many buyers on a third-tier data like permits," said Benjamin Reitzes, senior economist and foreign exchange strategist at BMO Capital Markets.

"We're going to wait until Friday's employment numbers in Canada before things get a little bit more exciting on the Canadian dollar front."

At 10:16 a.m., the Canadian dollar, which was mostly stronger against other major currencies, was trading at C$1.0087 versus the U.S. dollar, or 99.14 U.S. cents, weaker than its Friday close at C$1.0078, or 99.23 U.S. cents.

The currency's movements were expected to be subdued until Friday's Canadian employment data. The report is expected to show the economy added 15,000 jobs in April, while the unemployment rate held steady at 7.2 percent, according to a Reuters survey of analysts.

Reitzes said currency traders are also looking for additional clues on what newly appointed Bank of Canada Governor Stephen Poloz will say about monetary policy.

Prices for Canadian government bonds were lower across the curve. The two-year bond fell less than half a Canadian cent to yield 0.966 percent, while the benchmark 10-year bond slipped 3 Canadian cents to yield 1.774 percent.

(Editing by Jeffrey Hodgson and Dan Grebler)