CANADA FX DEBT-C$ pulls back as Canada's trade deficit widens

Tue Jun 4, 2013 9:49am EDT
 
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* C$ at C$1.0329 vs US$, or 96.81 U.S. cents
    * Canadian trade deficit jumps in April
    * U.S. trade deficit widens less than expected in April
    * Oil prices weigh on worries over U.S. demand

    By Solarina Ho
    TORONTO, June 4 (Reuters) - The Canadian dollar retreated
against the U.S. dollar on Tuesday as data that showed the
Canadian trade deficit widening in April and weaker commodity
prices kept the currency under pressure.
    Canada's trade deficit in April jumped as imports hit a
record high and exports eased slightly, the latest indication
that exporters' woes are crimping the economy, Statistics Canada
data indicated. 
    "Canada was able to outperform for a while, and now it's
starting to look more in line with the U.S. in terms of its
economic activity. If anything, maybe underperform. I think that
has weighed on the Canadian dollar," said David Tulk, chief
Canada macro strategist at TD Securities.
     At 9:25 a.m. (1322 GMT), the Canadian dollar 
traded at C$1.0329 versus the U.S. dollar, or 96.81 U.S. cents,
softer than Monday's finish at C$1.0278, or 97.30 U.S. cents.
    The U.S. trade deficit widened less than expected in April,
though the widening in the so-called real trade deficit could
prompt economists to lower their already low estimates for
second-quarter gross domestic product. 
    Higher taxes and government spending cuts have curbed
consumer spending in the United States and weighed on the
country's manufacturing activity.
    Oil prices slipped as weak U.S. manufacturing numbers from
Monday deepened worries about demand growth in the world's
biggest oil consumer. 
    Canada's dollar, which was mostly weaker against other
currencies except for its commodities counterparts - the
Australian and New Zealand dollars, was
expected to keep mostly within the day's highs and lows of
C$1.0333 and C$1.0278, Tulk said.
    Prices for Canadian government debt were mostly lower across
the maturity curve. The two-year bond eased 1.5
Canadian cents to yield 1.079 percent, while the benchmark
10-year bond fell 24 Canadian cents to yield 2.079
percent.