CANADA FX DEBT-C$ flat as Fed expectations offset weak U.S. data
* C$ at C$1.0503 vs US$, or 95.21 U.S. cents * U.S. durable goods orders have biggest drop in almost year * Fed speakers, Canada GDP this week * Bond prices rise across maturity curve By Alastair Sharp TORONTO, Aug 26 (Reuters) - The Canadian dollar was little changed against the U.S. dollar in thin trading on Monday as broad interest in acquiring the greenback on expectations of a Fed-inspired rally offset weaker-than-expected U.S. durable goods data. Orders for long-lasting U.S. manufactured goods such as refrigerators and computers recorded the largest drop in nearly a year last month, and a gauge of planned business spending on capital goods in the United States tumbled. "The U.S. data was a little soft," said Darcy Browne, managing director of foreign exchange sales at CIBC World Markets. The print initially boosted the loonie "because the market's becoming hyper-sensitive to data," he said. But the data's effect on the currency did not last with greenback buyers emerging quickly. The U.S. Federal Reserve has said it could start to reduce its massive stimulus program soon if economic data shows economic recovery in the United States is on pace. Such a move is expected to increase the value of the greenback. "I think the market is hoping that there is a dip to buy U.S. dollars against Canada," CIBC's Browne said. "People believe this U.S. dollar rally is real." The Canadian dollar ended the session trading at C$1.0503 versus the greenback, or 95.21 U.S. cents, just weaker than Friday's finish of C$1.0501 to the U.S. dollar, or 95.23 U.S cents. Monday's U.S. data followed figures last week that showed a slowdown in residential construction and new home sales, indicating that the U.S. economy may not grow much in the third quarter from the second. "We did see U.S. slide on that (durable goods) news, but we continue to believe overall the U.S. dollar should be well supported in the coming weeks," said Blake Jespersen, managing director, foreign exchange sales at BMO Capital Markets. "Therefore any opportunities to buy the U.S. dollar on dips will be definitely taken advantage of," he said. CIBC's Browne said the Canadian dollar would likely trade between C$1.0450 and C$1.0650 through the remainder of the week. Two Fed speakers and Canadian economic growth data could drive currency direction during this final week of August, typically one of the quieter weeks of the year, Jespersen said. The Fed has been the biggest news driver this summer and investors are expected to parse over anything out of the U.S. central bank amid expectations it will begin scaling back its stimulus program in the coming months. Canadian government bond prices were higher across the maturity curve, with the two-year bond rising 1 Canadian cent to yield 1.187 percent. The benchmark 10-year bond was up 33 Canadian cents, with a yield of 2.651 percent.
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