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

Tue Jun 4, 2013 4:47pm EDT
 
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* C$ at C$1.0344 vs US$, or 96.67 U.S. cents
    * Canadian trade deficit jumps in April
    * U.S. trade deficit widens less than expected in April

    By Solarina Ho
    TORONTO, June 4 (Reuters) - The Canadian dollar eased
against the U.S. dollar on Tuesday as data showing the Canadian
trade deficit widened in April 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. 
    "The Canadian data was more or less as expected, a little
bit on the soft side - the bounce back into deficit," said Don
Mikolich, executive director, foreign exchange sales at CIBC
World Markets, adding that investors sought safety in the
greenback, which rose against a basket of major currencies.
    The Canadian dollar finished the North American
session at C$1.0344 versus the U.S. dollar, or 96.67 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 reduce 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.
    "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.
    Canada's dollar, which was mostly weaker against other
currencies except for its commodities counterparts - the
Australian and New Zealand dollars - kept
within its recent trading range between C$1.0261 and C$1.0389.
    Prices for Canadian government debt were mixed. The two-year
bond rose 1 Canadian cents to yield 1.066 percent,
while the benchmark 10-year bond fell 22 Canadian
cents to yield 2.077 percent.