CANADA FX DEBT-C$ flat as rate view overshadows China data

Thu Oct 18, 2012 8:30am EDT
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* C$ at C$0.9790 vs US$, or $1.0215
    * Signs of China rebound helps lift sentiment
    * Attention turning to Bank of Canada meet next Tuesday

    By Alastair Sharp
    TORONTO, Oct 18 (Reuters) - The Canadian dollar was little
changed near a one-week high against its U.S. counterpart on
Thursday, buoyed by signs China's economy may be pulling out of
a slowdown but with gains kept in check by shifting views on the
Bank of Canada's rates stance.
    At 8:11 a.m. (1211 GMT) the Canadian dollar was
trading at C$0.9790 to the greenback, or $1.0215, compared with
C$0.9780, or $1.0225, at Wednesday's North American close.
    China likely hit the bottom of a seven-quarter long economic
downturn between July and September, but the slowest three
months of growth since the depths of the financial crisis and a
cloudy housing market outlook make recovery prospects tepid.
    Resource-linked currencies such as the Canadian dollar
typically react most forcefully to data from China, one of the
world's hungriest consumers of many commodities.
    But gains were capped, with the Bank of Canada due to make a
decision on interest rates next Tuesday, and after the bank's
governor failed to mention an intention to hike rates in a
speech this week.
    "The Aussie seems to generally have more of a reaction to 
the Chinese data," said Matt Perrier, director of foreign
exchange sales at BMO Capital Markets. "The fact that we've got
the Canada rate announcement on Tuesday will keep the Canadian
dollar at bay until then," he said. 
    The Australian dollar hit a 2 1/2 week high versus
the U.S. dollar, while it has appreciated to near C$1.02 against
the Canadian currency this week after trading below
parity earlier in October.
    The Canadian currency strengthened against the euro
, British pound, and Swiss franc
    Canadian government bond prices moved higher, with the
two-year bond up 1 Canadian cent to yield 1.128
percent, while the benchmark 10-year bond added 8
Canadian cents to yield 1.903 percent.