CANADA FX DEBT-C$ stronger as corporates buy, jobs halo sticks

Mon Mar 11, 2013 4:30pm EDT
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* C$ at C$1.0264 versus US$, or 97.43 U.S. cents
    * Weak Chinese data seen as distorted, limits effect
    * Dearth of Canadian data turns focus to U.S. numbers
    * Corporate Canada buying C$, limiting its weakness

    By Alastair Sharp
    TORONTO, March 11 (Reuters) - The Canadian dollar gained on
its U.S. counterpart on Monday, with corporate buying of the
currency helping it brush off weak Chinese data as the positive
North American jobs reports last week kept exerting influence.
    The loonie, as Canada's currency is colloquially known, has
weakened sharply since mid-February on a string of dismal
economic indicators, in turn giving Canadian companies reason to
sell U.S. dollar holdings to buy their home currency cheap.
    "Corporate Canada has been hedging all the way up above
parity," said John Curran, senior vice president at
CanadianForex, adding that many companies had expected the two
currencies to trade at around equal value this year. 
    China reported over the weekend that annual industrial
production for January and February combined was 9.9 percent -
the lowest level since October 2012 - while its consumer price
index had risen more than expected last month. 
    "Chinese data was the most significant thing so far we've
seen this week, but people clearly recognize it's very distorted
by the Lunar New Year. It hasn't really had much of an effect,"
said Greg Moore, a foreign exchange strategist at TD Securities.
    The Canadian dollar ended the day at C$1.0264 to
the greenback, or 97.43 U.S. cents, compared with C$1.0291, or
97.17 U.S. cents, at Friday's North American close.
    The currency was given a shot in the arm on Friday by twin
employment reports that showed both Canada and the United
States, its main trading partner, adding a healthy number of new
jobs in February. 
    With no domestic data in the pipeline and many Toronto-based
traders away from their desks during the March school break,
movement may be subdued in coming days.
    "It may fall to U.S. data to drive direction this week,"
Moore said, pointing to upcoming retail sales and inflation
    Without an external shock to prod it, the Canadian currency
would likely stay between C$1.0340 and C$1.0230 in coming days,
he said. It did not breach C$1.03 on Monday.
    Curran from CanadianForex said the relative loonie strength
was likely a short-term opportunity to buy U.S. dollars and that
the Canadian currency should weaken towards C$1.05 in the next
two to six months.
    "The days of below par are over, for the time being," he
said. The loonie had been worth more than the greenback for much
of the second half of 2012.
    The Canadian currency hovered near Friday's strongest levels
against the euro, yen and pound 
while it slipped against the Australian dollar.
    Prices for Canadian government debt were mixed, with the
two-year bond up one Canadian cent to yield 0.979
percent, while the benchmark 10-year bond slipped 7
Canadian cents to yield 1.943 percent.