CANADA FX DEBT-C$ steady after mixed data and rate signals

Thu Oct 25, 2012 4:43pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* C$ ends up at C$0.9939 versus the US$, or $1.0061
    * Stalled U.S. business spending hurts C$
    * Positive signs from China, UK help support sentiment
    * Investors still uncertain about Canadian rate outlook

    By Claire Sibonney
    TORONTO, Oct 25 (Reuters) - The Canadian dollar ended
slightly stronger against its U.S. counterpart on Thursday,
tracking commodity prices and equities higher in choppy trading.
    But the currency gave up most of its bigger earlier gains as
encouraging economic data from Britain and China was offset by
uncertainty about the U.S. economy, and as investors digested
recent mixed signals from the Bank of Canada.
    Traders of the resource-linked currency have been trying to
sort out confusion over comments by central bank Governor Mark
Carney about the direction and timing of future interest rate
moves.
    "(The Canadian dollar) has mainly been trading sideways,"
said Charles St-Arnaud, Canadian economist and currency
strategist at Nomura Securities International in New York.
    "I think investors are trying to digest all the conflicting
information that we got from the Bank of Canada over the past
week."
    The central bank has in the past week and a half whipsawed
the markets with hawkish and less hawkish messages on rates,
concluding on Wednesday by saying that rates are still likely to
rise, but a slowing economy means that higher rates have become
"less imminent". 
    A Reuters poll on Wednesday showed Canada's primary dealers
expect the Bank of Canada to hold off raising interest rates
until late next year or 2014. 
    The Canadian dollar ended the North American
session at C$0.9939 to the greenback, or $1.0061, compared with
C$0.9949, or $1.0051, at Wednesday's North American close.
    The currency, sensitive to any clues on the global growth
outlook, was supported by signs of recovery in China and a
bounce out of recession in Britain, which helped lift global
sentiment and commodity prices. 
    But by early afternoon, those gains had been nearly erased,
tracking volatility in other riskier assets after data showed
U.S. business investment stalled in September. 
    "The short-term rebound we're seeing in risk at the moment
may well struggle to see much follow-through," said Shaun
Osborne, chief currency strategist at TD Securities.
    Canadian bond prices eased across the curve, tracking U.S.
Treasuries lower. 
    The two-year bond was off 6 Canadian cents to
yield 1.149 percent, while the benchmark 10-year bond
 fell 44 Canadian cents to yield 1.898 percent.