CANADA FX DEBT-C$ breaks out of recent range to hit 2-week high

Tue Apr 29, 2014 5:35pm EDT
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* Canadian dollar at C$1.0951 or 91.32 U.S. cents
    * Bond prices mixed across the maturity curve

 (Adds comments by Poloz, quotes, updates prices)
    By Leah Schnurr
    TORONTO, April 29 (Reuters) - The Canadian dollar
strengthened to a more than two-week high against the greenback
on Tuesday, breaking out of its recent range as investors
positioned for a busy week that could provide insight on
monetary policy on both sides of the border. 
    In strengthening, the Canadian dollar broke through its
100-day moving average after weeks of trading sideways. The
currency had been content to hover around the C$1.10 level in
recent sessions as investors weighed modestly upbeat domestic
economic data against the central bank's still-neutral policy
    Investors got a chance to assess that stance on Tuesday with
Bank of Canada policymakers answering questions from
parliamentarians. The loonie had little reaction to comments
from Governor Stephen Poloz, even though he told the House of
Commons finance committee that the currency remains "quite high"
in a historical sense. 
    Poloz and Deputy Senior Governor Tiff Macklem will return to
Parliament Hill on Wednesday for another round of questioning.  
    Analysts said the loonie was driven by position-jockeying
ahead of a policy statement from the U.S. Federal Reserve later
in the week. Also on tap are Canadian monthly gross domestic
product figures and a slew of U.S. economic data, including the
April unemployment report. Canada will release its labor market
data next week.
    "Overall, the story today is really flow of funds and people
repositioning ahead of where they think they want to be ahead of
data at the end of the week and next week," said Rahim Madhavji,
president at in Toronto.
    The Canadian dollar ended the North American
session at C$1.0951 to the greenback, or 91.32 U.S. cents,
stronger than Monday's close of C$1.1025, or 90.70 U.S. cents.
    The loonie hit a 4-1/2-year low in March before bouncing
higher, though that rally had largely lost momentum this month.
    The Canadian dollar entered the year as a favorite short
trade for some investors, and many analysts still expect it to
weaken substantially before the end of 2014. 
    There would need to be either a build in positive sentiment
over the currency or a shift away from Poloz's dovish stance to
suggest that a bullish turn is taking place for the Canadian
dollar, said Camilla Sutton, chief currency strategist at
Scotiabank in Toronto.
    "We haven't seen really either of those, so I think for now
for the U.S. dollar-Canadian dollar, it's still a story of
either side of C$1.10 as a very comfortable place." 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year off 1 Canadian cent
to yield 1.082 percent, while the benchmark 10-year 
was up 4 Canadian cents to yield 2.444 percent.

 (Editing by Peter Galloway)