CANADA FX DEBT-C$ ends little changed ahead of U.S. jobs data

Thu May 1, 2014 5:01pm EDT
 
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* Canadian dollar closes at C$1.0961, or 91.23 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds strategist's comment, updates prices))
    By Alastair Sharp
    TORONTO, May 1 (Reuters) - The Canadian dollar pared early
losses and closed little changed against the greenback on
Thursday, suggesting that its recovery from a sharp drop in
March might have created a floor for the currency.
    The loonie, as the Canadian dollar is colloquially known, 
slipped in early trading in what is typically a seasonally weak
period for the currency, but it regained ground in the afternoon
 as investors positioned themselves ahead of the U.S. employment
report for April, set for release on Friday.
    "The fact we were pushed down, couldn't get above that
(C$1.10) level, is a clear sign this market no longer prefers to
be long dollar/Canada," said Brad Schruder, director of foreign
exchange sales at BMO Capital Markets. 
    "The negative sentiment that had been really hanging above
the loonie like a dark cloud is starting to break up," he said. 
  
    The Canadian dollar bounced back after hitting a 4-1/2-year
low in March but its rally back flattened out through most of
April. The currency has traded in a tight band on either side of
the C$1.10 level in recent weeks.
    The Canadian dollar ended the North American
session at C$1.0961 to the greenback, or 91.23 U.S. cents,
steady with Wednesday's close of C$1.0960, or 91.24 U.S. cents.
    "There's a very definite seasonal tendency for the early to
mid-part of May to be better for U.S. dollar-Canadian dollar,
and it was very good for U.S. dollar-Canadian dollar last year,"
said Shaun Osborne, chief currency strategist at TD Securities
in Toronto.
    "The 2014 trading pattern to me looks a fair bit like what
we saw last year. So, given the bounce we had last year, given
the general seasonal trend over the last 15 or so years for May
to be a little bit better for the U.S. dollar from a seasonal
point of view, I do think we're close to a low point here."
    Investors largely shrugged off Chinese data showing growth
in the country's vast manufacturing sector increased slightly in
April, though the figure came in just below expectations.
 
    The loonie can be sensitive to economic developments in
China, the world's second-largest economy and a major consumer
of natural resources.
    Investors expect Friday's U.S. unemployment report for April
to show that Canada's biggest trading partner added 210,000 jobs
in the month. Canada will not release its labor market report
for April until next week. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.4 Canadian
cents to yield 1.069 percent and the benchmark 10-year
 adding 32 Canadian cents to yield 2.370 percent.

 (Additional reporting by Leah Schnurr; Editing by Chizu
Nomiyama and Peter Galloway)