CANADA FX DEBT-C$ steady ahead of Irish vote, U.S. data

Thu May 31, 2012 8:11am EDT
 
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* C$ flat at C$1.0279 vs US$, or 97.29 U.S. cents
    * Bond prices little changed across the curve

    By Claire Sibonney	
    TORONTO, May 31 (Reuters) - The Canadian dollar was steady
against its U.S. counterpart on Thursday, recovering from a near
five-month low as expectations of an Irish vote in favor of
Europe's fiscal pact helped riskier assets.	
    Opinion polls pointed to a 'Yes' vote in Ireland's
referendum, which analysts said could prompt investors to cut
some of their hefty bearish bets on the euro and other
growth-related currencies. 	
    Still, gains were seen limited as concerns grew that Spain
may need to seek outside aid as worries over its troubled banks
sent Spanish government bond yields soaring. 	
    The European Commission on Wednesday offered Spain more time
to reduce its budget and direct aid to recapitalise distressed
banks, but the news had limited impact on financial markets.
 	
    Traders also saw end-of-month flows as being Canadian-dollar
negative and U.S.-dollar positive.	
    "It's going to continue to be fogged from month-end
positioning and rebalancing that's happening on a global scale
with all currencies, that's not just a Canadian dollar
phenomenon but the Canadian dollar is not going to be kept out
of that mix," said C.J. Gavsie, head of foreign exchange
products at BMO Capital Markets.	
    "Then we expect a jump right back to the fundamentals that
are going in the world and we're starting to see continue
strength in the (U.S.) dollar...however we are seeing interest
in diversification away from the U.S. dollar into the Canadian
dollar with respect to the crosses."	
    At 7:57 a.m. (1157 GMT), the Canadian dollar was at C$1.0279
against its U.S. counterpart, or 97.29 U.S. cents, up slightly
from Wednesday's North American session close at C$1.0292
against the U.S. dollar, or 97.16 U.S. cents.	
    Earlier, the currency hit C$1.0313, or 96.96 U.S. cents, its
weakest level since Jan. 9.	
    Investors will look to the U.S. ADP employment report and
weekly initial jobless claims for clues on the health of the
labor market ahead of Friday's key payrolls report.	
    Canadian government bond prices were little changed across
the curve with Canada's two-year bond off 1 Canadian
cent to yield 1.120 percent, while the benchmark 10-year bond
 added 3 Canadian cents to yield 1.789 percent..