CANADA FX DEBT-U.S. data lifts C$ to session high

Tue May 1, 2012 11:22am EDT
 
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* C$ hits session high of C$0.9841 vs US$, or $1.0162
    * Bond prices turn negative across curve
    * RBA surprises markets with 50 bps rate cut
    * US manufacturing picks up in April

    By Claire Sibonney	
    TORONTO, May 1 (Reuters) - The Canadian dollar hit a session
high against the greenback on Tuesday after
stronger-than-expected U.S. data boosted assets with strong ties
to economic growth in the United States, Canada's largest
trading partner.	
    The U.S. Institute for Supply Management report showed the
pace of growth in the U.S. manufacturing sector picked up in
April to its highest level in 10 months, suggesting the economy
still had some resilience after indications it had lost momentum
at the start of the second quarter. 	
    In the aftermath of the data, the currency rallied
to C$0.9841 versus the U.S. dollar, or $1.0162, from around
C$0.9887, or $1.0114 heading into the release. 	
    "This would largely be driven by the ISM," said Mazen Issa,
Canada macro strategist at TD Securities.	
    "Expectations were for it to retrench a little bit. I think
even the internals of the report were fairly strong as well, so
overall the very strong report would bode quite well for the
Canadian dollar."	
    The recovery for the Canadian dollar came after both Canada
and Australia, whose economies are closely linked to demand in
the global economy, disappointed markets with weaker than
expected growth in Canada and a surprise 50-basis point rate cut
by the Reserve Bank of Australia. 
 	
    Still, Canada's currency outperformed its commodity cousins,
the Australian and New Zealand dollars, the main movers among
the G10 currencies along with the Japanese yen.	
    At 11:01 a.m. (1501 GMT), the Canadian dollar CAD=D4 stood
at C$0.9844 against the U.S. dollar, or $1.0158, up from
Monday's session close at C$0.9879 versus the U.S. dollar, or
$1.0122. 	
    Matt Perrier, a director of foreign exchange sales at BMO
Capital Markets, noted the next area of Canadian dollar
resistance against its U.S. counterpart in the $0.9800-25 range.	
    Against the Australian dollar, Scotia Capital pointed to
resistance for the Canadian currency at C$1.0157.	
    Canadian bond prices turned negative following the solid ISM
data and continuing to outperform U.S. Treasuries. 	
    Canada's two-year bond eased 3 Canadian cents to
yield 1.352 percent, while the benchmark 10-year bond
 fell 22 Canadian cents to yield 2.062 percent.