CANADA FX DEBT-C$ gains on US$, follows greenback's broad direction

Mon Jul 22, 2013 9:35am EDT
 
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* C$ at C$1.0353 to US$, or 96.59 U.S. cents
    * Japan's yen gains on election result
    * Dearth of Canadian data this week provides little impetus

    By Alastair Sharp
    TORONTO, July 22 (Reuters) - The Canadian dollar was
stronger against its U.S. counterpart in early trade on Monday
on a minor greenback retreat but was seen clinging quite closely
to its neighbor in a tight range.
    The U.S. dollar has in recent weeks broadly gained as yields
spike in anticipation of a reduction in monetary stimulus, with
the Canadian currency managing to stick with the greenback and
gain against some other currencies.
    The Japanese yen gained against both North American
currencies after the country's prime minister won a decisive
electoral victory that could herald more political stability.
    "Canada's had a decent little run. When the (U.S.) dollar
was really rallying it hung in there quite well," said Darcy
Browne, managing director of foreign exchange sales at CIBC
World Markets.
    "Overall, the Canadian dollar still stands to benefit from
its proximity to the U.S., (but) it's a low-beta currency in
good times and bad times."     
    At 9:18 a.m. (1318 GMT) the Canadian dollar was
trading at C$1.0353 to the greenback, or 96.59 U.S. cents,
compared with C$1.0367, or 96.46 U.S. cents, at Friday's North
American close.
    Browne said the loonie, as the Canadian currency is
colloquially known, would likely not strengthen beyond C$1.0310
nor weaken past C$1.04 during the session, and that trade would
remain subdued all week given a dearth of data releases.
    "I would imagine we're just going to be on the ebbs and
flows of risk and dollar-mania throughout the course of the
week," he said.
    The price of Canadian government debt was higher across the
curve, though the rise was marginally at the short end. 
    The two-year bond was up 0.3 of a Canadian cent
to yield 1.085 percent, while the benchmark 10-year bond
 rose 8 Canadian cents to yield 2.351 percent.