CANADA FX DEBT-C$ steady after early dive on North American data

Fri Jul 17, 2015 9:44am EDT
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* Canadian dollar at C$1.2972 or 77.09 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, July 17 (Reuters) - The Canadian dollar weakened to
more than six-year lows against its U.S. counterpart on Friday,
and then pared its losses, following a slew of economic data
that signaled higher U.S. interest rates, while Canada's
benchmark rate just dropped.
     Canada's annual inflation rate edged up to 1 percent in
June, led by higher food prices, but the rate was tempered by
cheap energy prices, government data showed. 
    In the United States, consumer prices rose for a fifth
straight month, with gasoline prices contributing to the rise,
while housing starts jumped in June and building permits surged
to a near eight-year high. The figures were the latest
indicators supporting expectations of a rate hike this year by
the U.S. Federal Reserve. 
    "The Canadian data as a stand-alone normally probably
would've helped the Canadian dollar a wee bit," said Doug
Porter, chief economist at BMO Capital Markets, noting the U.S.
data was likely a bigger driver for Friday's currency moves.
    The Canadian numbers come just days after the Bank of Canada
cut interest rates for the second time this year in an effort to
spur economic growth. The move has sent the loonie to its
weakest level since March 2009.
    At 9:19 a.m. EDT (1319 GMT), the Canadian dollar 
was at C$1.2972 to the U.S. dollar, or 77.09 U.S. cents, little
changed from the Bank of Canada's official close on Thursday of
C$1.2970, or 77.10 U.S. cents.
    Immediately after the data was released, the currency dived
briefly to C$1.3009, or 76.87 U.S. cents, a level not seen in
more than six years. The currency has traded between C$1.2946
and C$1.3009 so far in the session.
    The Canadian dollar is expected to trade between C$1.2910
and C$1.3010 against the U.S. dollar on Friday, according to RBC
Capital Markets.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 3
Canadian cents to yield 0.428 percent and the benchmark 10-year
 rising 19 Canadian cents to yield 1.558 percent.
    The Canada-U.S. two-year bond spread was -25.8 basis points,
while the 10-year spread was -79.8 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway)