CANADA FX DEBT-C$ steady as BoC remarks offset weak global data
* C$ at C$0.9944 vs US$, or $1.0056 * C$ boosted after BoC hints at rate increase * U.S. jobs data supports greenback * Canada trade, housing data limits C$ gains * Bond prices mostly lower By Jon Cook TORONTO, Aug 9 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Thursday, as disappointing domestic data was offset by comments from Bank of Canada Governor Mark Carney that signaled the central bank may still raise interest rates. On Wednesday, Carney argued the case for raising rates in an interview with the BBC in London, even though he said a global slowdown was having an impact on Canada's economy. "We're in a very different place than the major crisis economies," Carney said, according to a transcript of the interview. "The extent to which we continue to grow above trend, we may withdraw some of that monetary policy stimulus." The central bank chief has been swimming against the global current since April with his message that borrowing costs will soon have to rise in Canada. "That should maintain a broadly supportive theme for the Canadian dollar," said Jeremy Stretch, head of foreign exchange strategy for CIBC in London. "We're seeing the Canadian dollar start to move back towards the bias of thinking about top-side risks on rates." Overnight, the Canadian currency touched a fresh three-month high after Carney's remarks, rising to C$0.9931 against the U.S. dollar, or $1.0069. But gains were tempered as the U.S. dollar rallied somewhat after data on Thursday showed an unexpected drop in U.S. jobless claims, suggesting a modest improvement in the labor market in the United States. Canada's trade deficit also unexpectedly soared to C$1.81 billion ($1.83 billion) in June as imports hit a record high while exports barely edged up, Statistics Canada data showed on Thursday. The data confirm that Canada, which relies heavily on trade, is suffering as Europe's economic crisis shows no sign of ending. Canadian housing starts also slowed more sharply than expected last month. The seasonally adjusted annualized rate was 208,500 units in July, compared with 222,100 units in June, data from the Canada Mortgage and Housing Corp showed on Thursday. Around 8:50 a.m. EDT (1250 GMT), the Canadian dollar was at C$0.9944 versus the U.S. currency, or $1.0056, little changed from Wednesday's close at C$0.9946 against the greenback, or $1.0054. Stretch said the currency would likely stay within a narrow range, between C$0.9920 to C$0.9970. "The fact that we haven't seen the Canadian dollar getting down towards C$0.99 is more of a function of the broader risk dynamics supporting the U.S. side of the equation," said Stretch. Other data on Thursday showed China's factory output slowed to its weakest in more than three years in July. But a drop in Chinese inflation raised the chances that China will act to stimulate its economy, helping limit losses and boost European shares. Europe's stock markets began their latest rally two weeks ago when European Central Bank President Mario Draghi said the bank was "ready to do whatever it takes to preserve the euro", raising hopes of bold steps to help lower the borrowing costs of Spain and Italy. Canadian bond prices were mostly lower. The two-year bond fell 3 Canadian cents to yield 1.177 percent, and the benchmark 10-year bond slid 6 Canadian cents to yield 1.829 percent.
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