CANADA FX DEBT-C$ climbs to one-week high, eyes equities

Fri Apr 13, 2012 8:33am EDT
 
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* C$ at C$0.9939 vs US$, or $1.0061
    * Currency moves higher ahead of BoC
    * Bond prices climb across curve

    By Jennifer Kwan	
    TORONTO, April 13 (Reuters) - The Canadian dollar edged
slightly higher against its U.S. counterpart on Friday,
supported by the expectation there could be a shift in sentiment
on the timing of the Bank of Canada's next rate move.	
    At around 8:10 a.m. (1210 GMT), the Canadian dollar 
was at C$0.9939 versus the U.S. dollar, or $1.0061, up a hair
from its North American finish at C$0.9945 versus the U.S.
dollar, or $1.0055.	
    "I think the market expectation is for a hawkish Bank of
Canada next week on Tuesday," said Firas Askari, head of foreign
exchange trading at BMO Capital Markets.	
    "No one expects any imminent signals of an immediate rate
hike, but I think the tone has changed dramatically out of the
Bank of Canada." 	
    Askari also said the market is still digesting a stellar
March employment figure released last week that adds to evidence
that the Canadian economy is finding its footing.	
    Canada's ailing jobs market sprang back to life in March
with a stunning 82,300 net new jobs, the most since September
2008 and a tentative sign that the economy may be growing enough
muscle to pressure the central bank to raise interest rates.
 	
    The median forecast in a Reuters poll of 40 economists and
strategists shows the next interest rate hike will come in the
second quarter of 2013. 	
    Still, the currency traded in a narrow range of between
C$0.9926 versus the greenback, its strongest since April 6, and
C$0.9972 on Friday as it tracked mixed global equities amid weak
Chinese growth data, Spain's rising borrowing costs and U.S.
earnings. 	
    World shares held steady and commodities
markets sank on Friday after China's first-quarter growth failed
to meet expectations.  	
    Chinese growth eased to an annual rate of 8.1 percent in the
first quarter from 8.9 in the previous quarter, and below an 8.3
percent forecast and the weakest pace in nearly three years.
 	
    Meantime, U.S. stock index futures trimmed losses after
JPMorgan reported higher earnings per share as the
company bought back stock. 	
    "It is tracking the broad risk-on and risk off, both of
which were seen last night and this morning. I'd look at the
influence of the Chinese GDP. I would look at the move to bid
equities higher," said Jack Spitz, managing director of foreign
exchange at National Bank.	
    Canadian government bond prices climbed across the curve,
with Canada's two-year bond edging up 2 Canadian
cents to yield 1.228 percent. The 10-year bond added
18 Canadian cents to yield 2.025 percent.