CANADA FX DEBT-C$ rallies 2 pct in first quarter of 2012

Fri Mar 30, 2012 4:34pm EDT
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* C$ ends at C$0.9975 vs US$, or $1.0025
    * Up down 0.8 pct for month, up 2 pct for quarter
    * Bond prices mostly higher

    By Jon Cook	
    TORONTO, March 30 (Reuters) - The Canadian dollar's momentum
stalled in March as the rally in equity markets ebbed on global
growth concerns, but the resource-heavy currency still finished
the first quarter up nearly 2 percent against its U.S.
    On Friday the Canadian dollar slid against most major
currencies as investors rebalanced their portfolios ahead of the
end of the first quarter and sold Canadian dollar positions.	
    "Our investors are choosing to play in other currency pairs
which actually move a little more," said Blake Jespersen,
managing director, foreign exchange sales at BMO Capital
    BNY Mellon custody data showed that riskier currencies like
the Canadian dollar, Australian dollar, and Norwegian dollar
were being sold as caution persisted in the currency market
heading into the weekend. 	
    The Canadian dollar ended the North American
session at C$0.9975 versus the U.S. dollar, or $1.0025, down
slightly from Thursday's close at C$0.9967 against the U.S.
currency, or $1.0033. It was up 0.1 percent for the week, but
down 0.8 percent in March.	
    However the currency gained almost 2 percent in the first
quarter as stabilization of Europe's debt crisis and a
strengthening U.S. economy pushed global equity markets higher
to start the year.	
    But a recent reduction in China's growth target and
softening U.S. data has taken some of the shine off commodities
and weakened the Canadian dollar.	
    U.S. data on Friday did little to push the currency from its
recent narrow range. Gains were capped, however, after the pace
of business activity in the Midwest slowed and gains in consumer
spending outstripped an increase in income. 	
    "We have a lot of conflicting data points, a lot of
conflicting news," said Camilla Sutton, chief currency
strategist at Scotia Capital. "There's no catalyst to break
things out of month-long ranges."	
    Sutton noted however that the Canadian budget delivered on
Thursday was still positive news for the currency medium-term,
enforcing Canada's reputation as an AAA-rated sovereign.	
    Canadian data also failed to prompt as much buzz as news on
Thursday that Canada would withdraw its one-cent coin from
     Domestic economic growth slowed in January to 0.1 percent
as strength in manufacturing and financial services was
partially offset by a decline in natural gas extraction,
Statistics Canada said on Friday. 	
    "If we do start to see the U.S. data soften slightly it will
be bad news for the Canadian dollar," said Jespersen.	
    Risk sentiment improved after debt-ravaged Spain presented a
budget projected to save more than 27 billion euros ($35.96
billion) in 2012 through spending cuts and revenue increases,
while euro zone finance ministers agreed to raise their
financial firewall to contain the region's debt
    Canadian bond prices were lower across the curve, mimicking
a drop in U.S. Treasuries, which marking the end of a turbulent
first quarter. 	
    Canada's 2-year bond dipped 4 Canadian cents to
yield 1.200 percent, while the 10-year bond slipped
31 Canadian cents to yield 2.118 percent.