CANADA FX DEBT-C$ consolidates after last week's gains

Mon Apr 7, 2014 4:29pm EDT
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* Canadian dollar at C$1.0969 or 91.17 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quote, updates prices)
    By Leah Schnurr
    TORONTO, April 7 (Reuters) - The Canadian dollar firmed
modestly against the greenback on Monday with gains limited by
investors consolidating their positions after the currency's
runup late last week following a robust domestic jobs report.
    The backdrop on Monday was the provincial election in
Quebec, with polls closing at 8 p.m. EDT (2400 GMT). But with
the governing separatist party behind in public opinion surveys,
the loonie was not expected to see much impact. 
    The Bank of Canada released its first-quarter survey of
business managers in what was set to be an otherwise light week
for domestic economic data. The survey showed Canadian
businesses widely expect their input costs to rise as a result
of the weaker loonie and painted a relatively upbeat view of
economic growth over the next 12 months. 
    The survey "seemed a little more upbeat, people responding
somewhat to the weaker currency as a bit of a positive on the
export side," said Don Mikolich, executive director of foreign
exchange sales at CIBC World Markets in Toronto.
    The loonie rose strongly at the end of last week after data
showed the domestic economy added twice as many jobs as expected
in March. 
    On Monday, the Canadian dollar ended the North
American session at C$1.0969 to the greenback, or 91.17 U.S.
cents, a bit firmer than Friday's close of C$1.0981, or 91.07
U.S. cents.
    Last week's data had pushed the loonie through C$1.10,
piercing the psychologically important level for the first time
in a month. That level will likely continue to be a meaningful
pivot for the currency, said Scott Smith, senior market analyst
at Cambridge Mercantile Group in Calgary.
    "This level is going to be pretty important resistance on
the way back up if the U.S. dollar starts to gain more strength
here," he said.
    In Quebec, the latest opinion polls showed the Liberals
ahead of the separatist Parti Quebecois, tamping down concerns
over a possible referendum on independence from Canada.
    In the past, Quebec has had two referendums on whether to
separate, both of which failed. The separatists lost the last
one, in 1995, but by just over one percentage point.
    "Compared to the other two situations where Quebec had their
referendum and we saw the Canadian dollar weaken off quite
significantly, I don't think there's a big risk for this
election," Smith said.
    "Markets obviously don't like indecision, and they don't
like the possibility of potentially having a referendum, but
that's been played down over the last few weeks."
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1 Canadian cent
to yield 1.082 percent, and the benchmark 10-year up
27 Canadian cents to yield 2.462 percent.

 (Editing by Peter Galloway)