CANADA FX DEBT-C$ closes slightly weaker, focus on China data

Fri Oct 12, 2012 4:57pm EDT
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* C$ at C$0.9793 versus the U.S. dollar, or $1.0211
    * Lower oil and metal prices drag
    * Confined to range of just C$0.9768 to C$0.9809
    * Ends week flat despite sharp Wall St drop
    * Focus turns to China trade data over weekend

    By Alastair Sharp
    TORONTO, Oct 12 (Reuters) - The Canadian dollar ended
slightly weaker against the U.S. currency on Friday, with lower
commodity prices weighing on sentiment and traders nervous about
Chinese trade and economic growth data that will start to flow
over the weekend.
    Still, the resource-linked currency ended the week just a
few notches weaker than it started it, bucking the sharp
declines in North American equity markets, which were spooked by
early third-quarter earnings disappointments and uncertainty
about a debt bailout for Spain.  
    On Saturday, China is set to release trade figures for
September, which are expected to show a pick-up in activity even
though momentum will likely stay weak. China will report GDP
numbers, industrial production and retail sales figures later
next week. 
    "We have apprehension about the Chinese trade data coming
out on the weekend ... and the market has grown increasingly
sensitive to those figures," said Adam Button, a currency
analyst at ForexLive in Montreal. "The Canadian dollar is one of
those currencies particularly sensitive to Chinese slowdown."
    China is the world's second largest economy, and a major
buyer of the raw materials Canada exports. 
    The Canadian currency closed at C$0.9793 versus the U.S.
dollar, or $1.0211, down slightly from Thursday's North American
session close of C$0.9787 to the greenback, or $1.0218. It moved
in a narrow range of C$0.9809 and C$0.9768 in the session. 
    Commodity prices and other currencies influenced by them
also struggled as traders awaited clarity on whether heavily
indebted Spain would request a bailout to shore up its finances.
A bailout request is widely seen as positive as it would remove
some uncertainty from financial markets. 
    Canadian and U.S. stocks pulled back, posting their sharpest
weekly declines in four months, as investors fretted over what
is expected to be a weak earnings season.
    "It's been a disappointing week in stocks but the Canadian
dollar has proven to be resilient once again," Button said.
    As caution waxed, Canadian government bond prices moved
higher. The two-year bond gained 2 Canadian cents to
yield 1.142 percent, while the benchmark 10-year bond
 added 7 Canadian cents to yield 1.801 percent.
    The Canadian dollar received some support from news that
U.S. consumer sentiment unexpectedly rose in October to its
highest level in five years as optimism about the overall
economy improved. 
    "Ultimately we need to see some signs that the North
American economy is holding up," said Jeremy Stretch, head of
foreign exchange strategy at CIBC World Markets in London.