CANADA FX DEBT-C$ picks up on healthy German growth data

Tue May 15, 2012 8:23am EDT
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* C$ firms to C$1.0007 vs US$, or 99.93 U.S. cents
    * Bond prices ease across the curve

    By Claire Sibonney	
    TORONTO, May 15 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Tuesday after surprisingly
strong growth data from Germany, but worries about the deepening
impact of the euro area crisis and fears of a Greek exit kept
investors cautious.	
    The German economy grew 0.5 percent in the first three
months of the year, well ahead of forecasts due to a big rise in
exports, but weakness elsewhere in the region meant the euro
zone stagnated in the first quarter. 	
    "We're doing better on the back of the German Q1 GDP. The
fact that a myriad of other countries in the euro zone printed
either negative or flat growth for Q1 and a number of
consecutive quarters of negative growth or flat growth was more
or less ignored," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.	
    At 8 a.m. (1200 GMT), the Canadian dollar stood at
C$1.0007 versus the U.S. dollar, or 99.93 U.S. cents, slightly
stronger than Monday's North American session finish at C$1.0029
versus the U.S. dollar, or 99.71 U.S. cents.	
    Spitz saw resistance for the Canadian dollar around
C$0.9930-0.9940 and support around C$1.0050-1.0060.	
    "It's the great sideways trade of 2012 that continues
unabated," he said.	
    Investors will look to Canadian inflation data for April at
the end of the week for more significant direction, watching for
any clues on the Bank of Canada's next tightening move.	
    Analysts say a core inflation reading above 2 percent would
add to expectations that the Bank of Canada could resume raising
interest rates later this year. 	
    With the risk-on mood in markets on Tuesday, Canadian bond
prices eased across the curve. The two-year government bond
 was down 5 Canadian cents to yield 1.298 percent,
while Canada's 10-year bond lost 15 Canadian cents
to yield 1.951 percent.