CANADA FX DEBT-C$ holds steady vs US$ as euro action dominates

Tue Jun 10, 2014 10:17am EDT
 
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* Canadian dollar at C$1.0906 or 91.69 U.S. cents
    * Bond prices fall across the maturity curve

    By Solarina Ho
    TORONTO, June 10 (Reuters) - The Canadian dollar held steady
against the greenback in muted trading on Tuesday, but saw more
action against other currencies with the euro under pressure
after the European Central Bank (ECB) cut interest rates to
record lows last week.
    "I think crossflows are acting as a bit of a restraint on
USD/CAD. We think generally speaking, USD/CAD is looking quite
supported in the C$1.08-figure area," said Shaun Osborne, chief
currency strategist at TD Securities.
    In addition to the rate cuts, the ECB also launched measures
to pump money into the sluggish euro zone economy and pledged to
do more if needed. The measures were aimed at easing pressure on
the strong euro, which is threatening economic recovery and
importing disinflation. 
    "The euro in general looks quite soft here, across the board
... The markets are slowly getting the messages here that the
ECB doesn't want the euro higher," Osborne said. 
    The Canadian dollar was trading at C$1.0906 to the
greenback, or 91.69 U.S. cents, at 9:56 a.m. (1356 GMT), little
changed from Monday's close of C$1.0908, or 91.68 U.S. cents.
    The currency was at around C$1.4776 against the European
currency after Monday's close of C$1.4821, but it
weakened against its commodity-currency peers, the Australian
and New Zealand dollars .
    Osborne, who expected the Canadian dollar to trade between
C$1.0890 and C$10945 for the session, said the U.S. dollar,
historically, strengthens in June and said the Canadian dollar
could move toward C$1.1050 in the coming weeks if it weakens
past C$1.0930 in the near term.
    Canadian government bond prices were weaker across the
maturity curve, with the two-year down 1.2 Canadian
cents to yield 1.076 percent and the benchmark 10-year
 was down 26 Canadian cents to yield 2.349 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)