CANADA FX DEBT-C$ weakens as central banks buoy greenback

Thu Aug 1, 2013 9:50am EDT
 
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* C$ at C$1.0303 vs US$, or 97.06 U.S. cents
    * Big event risk has passed, giving greenback momentum
    * Eye on U.S. jobs data on Friday
    * Canadian debt prices mixed

    By Andrea Hopkins
    TORONTO, Aug 1 (Reuters) - The Canadian dollar weakened
slightly against the U.S. dollar on Thursday as stocks, oil and
the greenback rose worldwide after central banks in Europe
joined the Federal Reserve in leaving policy unchanged to
support a tentative recovery in the global economy.
     The European Central Bank and the Bank of England both
ended their latest policy meetings by leaving rates at record
lows, a day after the Fed said the U.S. economy still needed its
support and avoided any mention of a change to its stimulus
program. 
     The promise of abundant liquidity came as data for July
revealed industrial activity picking up in the euro zone for the
first time in two years, greater stability in China's vast
factory sector and a surge in British production.
 
    "So far having the risks off the table of U.S. GDP, FOMC,
ECB, Bank of England - all of that is allowing the old trend to
re-emerge," said Camilla Sutton, chief currency strategist at
Scotiabank.
    At 9:38 a.m. EDT (1338 GMT), the Canadian dollar 
was at C$1.0303 versus the U.S. dollar, or 97.06 U.S. cents,
down from Wednesday's North American session close at C$1.0272
versus the U.S. dollar, or 97.35 U.S. cents.
    Sutton said she expects the Canadian dollar to trade within
a range of C$1.0247 to C$1.0340 on Thursday.
    Markets will now turn their focus to U.S. nonfarm payrolls
for July, which are due out on Friday. A survey of analysts
polled by Reuters expect employers to have added some 184,000
jobs in July, which would suggest the economy is strong enough
to allow the Fed to begin ending its program of quantitative
easing.
    "Tomorrow's nonfarm is really the next and final big event
and I think that is the one that really matters. If nonfarm
comes in at least close to expectations or close to 200,000, it
will drive expectations for tapering in September," Sutton said.
    Government bond prices were mixed across the maturity curve.
The two-year bond was down 3 Canadian cents to yield
1.168 percent, while the benchmark 10-year bond fell
56 Canadian cents to yield 2.520 percent.