CANADA FX DEBT-C$ firms slightly, helped by U.S. data

Mon Oct 1, 2012 4:40pm EDT
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* C$ firms to C$0.9827 vs US$, or $1.0176
    * U.S. manufacturing data offers some support
    * Canadian producer data, revisions have little impact

    By Alastair Sharp
    TORONTO, Oct 1 (Reuters) - The Canadian dollar firmed
slightly against the U.S. currency on Monday, help by stronger
precious- and base-metal prices and by U.S. manufacturing data
that showed expansion for the first time since May.
    The Canadian currency, which typically benefits from signs
of stronger global growth, also took comfort from a stress test
of Spanish banks that did not reveal any big new problems.
    "If you can get risky assets performing better and policy
continues to head in the right direction in Europe, then that
would be the next big thing to drive the currency higher," said
Mark Chandler, head of Canadian fixed income and currency
strategy at Royal Bank of Canada.
    The Canadian dollar closed at C$0.9827 against the
U.S. dollar, or $1.0176, after ending last week at $0.9832, or
    The softer U.S. dollar also helped boost the price of gold
toward a one-year high and lifted copper prices.  
    The Canadian dollar was also stronger against most other
major currencies, though it lagged the euro. Europe's single
currency outperformed as European officials signaled that Spain
could request a bailout as early as next weekend, a move many
hope will help contain the euro zone debt crisis.
    Chandler said the Canadian dollar would likely trade in a
narrow range until Friday, when employment data from both Canada
and the United States should provide further direction.
    "In the meantime, the currency still remains largely driven
by risk proxies, which are slightly positive now," he said. 
    Hopes for aggressive action by big central banks to
stimulate economic growth more than offset evidence that the
euro zone's economy was heading for a second recession in three
    The currency brushed off data showing Canadian producer
prices slipped in August.  
    Another report on Monday showed the pace of growth in
Canadian manufacturing fell for a third straight month in
September, hitting a six-month low, another sign that economic
momentum is slowing in Canada as it is worldwide.
    Canadian government bond prices were higher, with the
10-year bond rising 16 Canadian cents to yield 1.71
percent, while the 30-year issue rose 18 Canadian
cents to yield 2.313.