CANADA FX DEBT-Canada dollar softer vs greenback on good US data

Wed Mar 13, 2013 5:06pm EDT
 
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* C$ ends at C$1.0273 vs US$, or 97.34 U.S. cents
    * U.S. retail sales better than expected
    * Bond prices weaker across curve

    By Solarina Ho
    TORONTO, March 13 (Reuters) - The Canadian dollar was weaker
against the U.S. dollar on Wednesday, as better-than-expected
U.S. retail sales bolstered the greenback, while a dearth of
domestic data limited moves for Canada's currency.
    Retail sales out of Canada's largest trading partner rose
more than expected in February as Americans bought motor
vehicles and a range of other goods, even as they paid more for
gasoline, suggesting consumer spending this quarter will hold
up, despite higher taxes. 
    The data is the latest evidence that the U.S. economic
recovery is gaining traction.
    The Canadian dollar strengthened initially after the robust
data bolstered prospects for the world's largest economy, but
trimmed gains for the remainder of the session as the U.S.
dollar rose to seven-month highs. 
    "Over the past two years, usually when you had good U.S.
data, you would have had an appreciation of the Canadian
dollar," said Charles St-Arnaud, economist and currency
strategist at Nomura Securities in New York. 
    "Now, the correlation has been changing ... Investors are
gradually turning a bit more optimistic about the U.S. economy,
especially given the signs coming from the housing market."
    The Canadian dollar was trading at C$1.0273 to the
greenback, or 97.34 U.S. cents, compared with C$1.0261, or 97.46
U.S. cents, at Tuesday's North American close.
    "We're finally back in what you would consider a normal
mode, where stronger data in the U.S. is typically positive for
the U.S. dollar. But we haven't lost that much ground against
the U.S.," said Mark Chandler, head of Canadian fixed income and
currency strategy at RBC Capital Markets.
    The Canadian dollar was stronger against the euro and Swiss
franc. It softened against sterling after Canada on Tuesday
touched its strongest level against the British pound since June
2010 on dismal UK manufacturing data. 
    There is little that is expected to move markets on the
economic data front for Canada this week, although Chandler said
the currency could move if Friday's report on existing home
sales is particularly weak. 
    The price of Canadian government debt was weaker across the
curve, with the two-year bond off 3 Canadian cents to
yield 0.979 percent, while the benchmark 10-year bond
 eased 9 Canadian cents to yield 1.920 percent.