CANADA FX DEBT-C$ dips after US jobless data; China growth eyed

Thu Oct 18, 2012 10:21am EDT
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* C$ at C$0.$0.9815 vs US$, or $1.0188
    * U.S. jobless claims weigh
    * Signs of China rebound help lift sentiment
    * Focus turning to Tuesday's Bank of Canada announcement

    By Alastair Sharp
    TORONTO, Oct 18 (Reuters) - The Canadian dollar slipped
against its U.S. counterpart on Thursday after disappointing
U.S. jobless claims data removed some shine from a global
outlook that was buoyed overnight by signs China's economy may
be pulling out of a slowdown.
    The number of Americans filing new claims for unemployment
benefits rose last week, reversing a sharp decline the previous
week, but still pointing to a labor market that is slowly
    The higher U.S. jobless claims data trumped
better-than-expected Canadian wholesale sales figures released
at the same time. 
    "It's just another reason to take off a little bit of risk,"
said John Curran, senior vice president at CanadianForex,
referring to the jobless data. "I think people are mostly
focusing on what'll come out of Europe."
    The leaders of Europe's two central powers, Germany and
France, clashed over greater EU control of national budgets and
moves toward a single banking supervisor on Thursday, hours
before a two-day European Union summit starts in Brussels.
      At 9:37 a.m. (1337 GMT) the Canadian dollar was
trading at C$0.9815 to the greenback, or $1.0188, compared with
C$0.9780, or $1.0225, at Wednesday's North American close.
    The resource-linked Canadian currency had strengthened
overnight after data showed that China, one of the world's
hungriest consumers of many commodities, had likely hit the
bottom of a seven-quarter long economic downturn between July
and September. 
    But gains were limited, as they have been recently, by
uncertainty over whether the Bank of Canada plans to drop a
hawkish bias on interest rates, a question that may be answered
when the bank announces its latest rate decision next Tuesday. 
    "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." 
    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
    CanadianForex's Curran said that if the Bank of Canada
retains language about an eventual rate rise the currency could
significantly strengthen, whereas movement would likely be more
subdued if the language is removed. 
    Canadian government bond prices moved higher, with the
two-year bond up 3 Canadian cent to yield 1.120
percent, while the benchmark 10-year bond added 19
Canadian cents to yield 1.891 percent.