CANADA FX DEBT-C$ steadies after last week's sharp drop

Mon Jul 28, 2014 9:46am EDT
 
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* Canadian dollar at C$1.0811 or 92.50 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, July 28 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday, steadying after the
previous session's sharp drop while investors positioned
themselves ahead of some key economic reports on both sides of
the border.
    Still, the currency stayed weaker than the C$1.08 level,
which could lead to more downside after it fell through some
significant technical levels on Friday.
    "The price action that we're seeing in the loonie this
morning is seeing a bit of a bid but essentially unchanged, and
that's just a pause from the big selloff we saw on Friday," said
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    If this week's U.S. economic data comes in stronger than
expected, it could provide enough momentum to send the loonie
into the C$1.09s, Smith said.
    The Canadian dollar was at C$1.0811 to the
greenback, or 92.50 U.S. cents, a tad stronger than Friday's
close of C$1.0814 or 92.47 U.S. cents.
    After last week's relatively quiet domestic calendar,
investors will get a look at more economic data in the coming
days, including Canadian economic growth for May and producer
prices for June. 
    But the bigger focal point will be the United States this
week, where markets will get the first reading of second-quarter
growth figures and the July unemployment report, as well as a
Federal Reserve meeting. 
    The U.S. gross domestic product report could have the
biggest impact on markets, with risk to the downside if the
economy doesn't achieve the 3 percent growth rate economists
forecast, Smith said. While that could hurt the U.S. dollar, it
could be a benefit to the loonie.
    "If we do see something come in lower than expected, I don't
think markets are necessarily prepared for that," he said.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year off 1 Canadian cent
to yield 1.088 percent. The benchmark 10-year was
unchanged to yield 2.120 percent, holding at a more than
one-year low.

 (Editing by Peter Galloway)