CANADA FX DEBT-C$ ekes gain vs US$ after weaker than expected US data

Thu May 16, 2013 10:16am EDT
 
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* C$ C$1.0166 vs US$, or 98.37 U.S. cents
    * U.S. jobless claims rose sharply; new home starts tumbled
in April
    * U.S. inflation points to softer demand in economy
    * Canadian CPI data on Friday in focus
    * Bond prices higher across the curve

    By Solarina Ho
    TORONTO, May 16 (Reuters) - The Canadian dollar strengthened
marginally against its U.S. counterpart in early trade on
Thursday, following a batch of weaker-than-expected U.S. data
that raises questions about the economic recovery of Canada's
largest trading partner.
    U.S. jobless claims rose sharply last week, a sign of a
weaker labor market, while ground-breaking at home construction
sites tumbled in April and a gauge of underlying inflation
pointed to weak demand. 
    The U.S. economy has shown signs that growth slowed late in
the first quarter and in April as Washington's push to trim the
budget deficit weighed on consumers and businesses.
    "The market is not really focused on what's going on in
Canada right now," said Greg Moore, currency strategist at TD
Securities. "Essentially it's all about the U.S."
    Despite the softer-than-forecast data, Moore said compared
to some of its peers, the United States is still a growth story
and the Canadian economy is seen benefiting more so than other
economies from overall U.S. strength.
    The loonie has underperformed the greenback for most of this
week, as the U.S. currency has been bid on across the range of
major currencies.
   At 9:58 a.m. (1340 GMT) the Canadian dollar was
trading at C$1.0166 to the greenback, or 98.37 U.S. cents,
compared with C$1.0172, or 98.31 U.S. cents, at Wednesday's
North American close. Earlier, the currency had weakened to
C$1.0208, or 97.96 U.S. cents.
    The currency was seen trading between the mid to upper
C$1.02's and the mid C$1.01's, said Moore.
    The Canadian dollar was broadly weaker against most of its
currency peers, though it was stronger against its commodity
counterparts, the Australian and New Zealand
 dollars. It touched its strongest level against the
Aussie since October, 2012 and its strongest level against the
Kiwi since early February, 2013.
    Friday's Canadian inflation data will be the domestic
highlight for this week. Economists polled by Reuters are
expecting no growth for the month of April. 
    "It fits in with global story as well that you're seeing all
kinds of inflation measures in developed economies all over the
world disappoint, or below what anybody had been expecting,"
said Moore.
    The two-year bond was up 1.9 Canadian cent to
yield 1.018 percent, while the benchmark 10-year bond
 rose 17 Canadian cents to yield 1.905 percent.