CANADA FX DEBT-C$ firms against US$; Fed minutes in focus

Tue Apr 9, 2013 5:05pm EDT
 
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* C$ at C$1.0163 vs US$, or 98.40 U.S. cents
    * Holds near 4-1/2 year highs vs yen
    * Touches weakest level vs NZD since mid-2005
    * Bond prices mostly lower across curve
    * FOMC minutes on Wed in focus

    By Solarina Ho
    TORONTO, April 9 (Reuters) - The Canadian dollar was firmer
against its U.S. counterpart on Tuesday as positive Chinese
economic data helped bolster investor sentiment toward riskier
assets, though moves were limited by a lack of major North
American news and data.
    A solid start to U.S. corporate earnings season and a fall
in Chinese inflation in March helped stocks around the world and
lifted commodity prices, including copper and oil.
   
    "The pair going to just continue to trade sideways for the
next few days," said Gareth Sylvester, director at Klarity FX in
San Francisco. "Data out of Canada is very light. All
housing-centric and none of the individual indicators will be a
market mover."
    The Canadian dollar remained near four-and-a-half-year highs
versus the yen following the Bank of Japan's aggressive stimulus
policy last week. 
    Mixed Canadian housing data did little to move the currency.
Housing starts edged higher in March as rural starts surged, but
urban starts declined, while separate data showed the value of
Canadian building permits was weaker-than-expected.
 
    "We didn't really get that much of a strengthening, much of
a reaction off the housing start data," said Mazen Issa, macro
strategist at TD Securities.
    "More recently, in the absence of data and more significant
events taking place abroad, the drivers tend to shift toward
events abroad."
    The Canadian dollar finished Tuesday's North
American session at C$1.0163 versus the U.S. dollar, or 98.40
U.S. cents, close to the 50-day moving average of C$1.0160, or
98.43 U.S. cents, and stronger than Monday's close of C$1.0173,
or 98.30 U.S. cents.
    Its performance was otherwise weaker against other
currencies, as Canada's dollar touched lowest level against the
New Zealand dollar since mid-2005.
    Analysts expect the Canadian dollar to remain under
pressure, however.
    "The market is, overall, of the opinion - comparing U.S. and
Canadian economic fundamentals - the U.S. fundamentals are
certainly outperforming that of its North American counterpart
and that's what's giving the U.S. it's edge against the Canadian
dollar," said Sylvester.
    On Wednesday, focus will turn to the United States, with the
release of the FOMC minutes from Fed's March meeting. U.S.
retail sales and University of Michigan preliminary sentiment
data on Friday could also be market movers.
    Canadian government bond prices were mostly lower across the
curve, with the two-year bond off half a Canadian
cent with a yield of 0.995 percent and the benchmark 10-year
bond off 4 Canadian cents to yield 1.769 percent.