CANADA FX DEBT-C$ limps to fifth day of range-bound play

Tue Apr 23, 2013 4:34pm EDT
 
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* C$ at C$1.0262 vs US$, or 97.45 U.S. cents
    * Retail sales rise more than expected, but volumes flat
    * German, Chinese data spark concerns about global economy
    * Bond prices rise across curve

    By Solarina Ho
    TORONTO, April 23 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Tuesday as the currency
consolidated after last week's volatility, while soft economic
data also kept investor sentiment subdued.
    For the fifth straight day, the Canadian dollar finished
within a tight 11-point range between C$1.2059 and C$1.2070
after weakening some 1.2 percent early last week in reaction to
plummeting commodity prices.
    "Things have calmed down ... It looks like we're in for a
period of consolidation," said John Curran, senior vice
president at CanadianForex.
    Canadian retail sales for February rose a
greater-than-expected 0.8 percent from January, but in volume
terms, which is a more important GDP measure, sales were flat.
 
    "At the end of the day, we're still going to focus on
Canadian fundamentals. The numbers today were okay. Going longer
term, I believe the slowdown in Canada will occur and we will
see the Canadian dollar weaken off," Curran added.
    Canada's dollar finished the North American session
at C$1.0262 versus the U.S. dollar, or 97.45 U.S. cents, little
changed from Monday's North American finish at C$1.0261, 97.46
U.S. cents.
    The Canadian dollar was mostly outperforming other major
currencies. It touched its strongest level against the
Australian dollar in more than a month.
    A reasonable degree of top side interest was likely
containing the currency from pushing through C$1.03, said Jeremy
Stretch, head of foreign exchange strategy at CIBC World Markets
in London. He added that the Canadian dollar could test the
C$1.0295 level in the near term.
    "It's remarkably tightly ranged in the short term. It does
feel that we have a cautious top side bias," said Stretch.
    "You could partly attribute that to the backwash from the
Chinese PMI data ... There's certainly a bias toward slightly
more risk aversion earlier in the session in the wake of the
German manufacturing PMI numbers." 
    German PMI data showed a sharp drop in the country's
business activity, fanning concerns about the euro zone economy,
while growth in China's vast factory sector also dipped in April
as new export orders shrank, suggesting China still faces
formidable global headwinds in the second
quarter.  
    U.S. factory activity expanded at its slowest pace in six
months in April, the latest signal that economic growth was
losing momentum in the second quarter. 
    U.S. data released for the remainder of this week, including
gross domestic product figures on Friday, will be the focal
point for the currency.
    Canadian government bond prices were lower across the curve,
with the two-year bond off less than half a Canadian
cent with a yield of 0.947 percent, while the benchmark 10-year
bond was down 13 Canadian cents to yield 1.725
percent.