CANADA FX DEBT-C$ pushed and pulled by U.S. data

Fri Apr 26, 2013 9:13am EDT
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* C$ at C$1.0206 vs US$, or 97.98 U.S. cents
    * U.S. Q1 GDP data shows growth less than expected

    By Alastair Sharp
    TORONTO, April 26 (Reuters) - The Canadian dollar was little
changed versus the U.S. dollar in early trade on Friday after
data showed U.S. economic growth sped up in the first quarter
but not by as much as had been expected. 
    The loonie, as the currency is colloquially known, is on
track to notch a weekly gain of 0.6 percent. It traded in a
tight range to start the session after data that presents
opposing ramifications for the Canadian currency.
    U.S. economic growth regained speed in the first quarter,
but not as much as expected, which could heighten fears the
already weakening economy could struggle to handle deep
government spending cuts and higher taxes. 
    "Dollar/Canada is kind of caught between it being a soft
number which would be U.S. dollar negative, but also a soft
number is slightly negative for risk, and that would typically
be Canadian dollar negative," said Adam Cole, global head of
foreign exchange strategy at Royal Bank of Canada.
    At 8:58 a.m. (1258 GMT) the Canadian dollar was
trading at C$1.0206 to the greenback, or 97.98 U.S. cents, only
marginally stronger than Thursday's North American close of
C$1.0209, or 97.95 U.S. cents.
    The loonie did at one point break to its strongest level
since April 15, before paring those gains.
    RBC's Cole said that in the next three to six months he
expects the loonie to weaken to C$1.05 based on the country's
external imbalance and the reluctance of the Bank of Canada to
raise rates.
    For next week, he said currency investors will be looking
for news out of the U.S. Federal Reserve's monetary policy
meeting mid-week, Canadian GDP data on Thursday, and a U.S.
payrolls report on Friday. Canada also reports jobs data next
    The price of Canadian government debt rose across the curve,
with the two-year bond up 2-1/2 Canadian cents to
yield 0.934 percent, while the benchmark 10-year bond
 rose 31 Canadian cents to yield 1.709 percent.