CANADA FX DEBT-C$ returns above parity, Macklem speech eyed

Tue Feb 1, 2011 8:30am EST
 
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 * C$ rises above parity to $1.0026
 * Bonds softer across the curve as investors eye data
 * BoC's Tiff Macklem speaks in Alberta on productivity
 TORONTO, Feb 1 (Reuters) - Canada's dollar returned to
above parity against a broadly softer U.S. dollar on Tuesday,
though gains were held in check by a softer price of oil.
 The currency CAD=D4 skidded nearly a penny in the
previous session, hitting its lowest level this year before
paring losses, after Finance Minister Jim Flaherty's cautious
remarks on employment prompted investors to price in a weak
January jobs figure on Friday.[ID:nN31250834] [ID:nN31215923]
 By Tuesday morning, the U.S. dollar had tumbled across the
board, hitting a 2 1/2-month trough against a currency basket
as investors highlighted expectations the U.S. Federal Reserve
will lag far behind other central banks -- notably the European
Central Bank and the Bank of England -- in raising interest
rates. [FRX/]
 The price of oil, often a driver of Canada's currency,
eased slightly as the market assessed the risk of Egypt's
social unrest spreading to neighbouring OPEC members. [O/R]
 At 8:10 a.m. (1310 GMT), the Canadian currency was at
C$0.9974 to the U.S. dollar, or $1.0026, up from C$1.0015 to
the U.S. dollar, or 99.85 U.S. cents, when it had finished
below parity for a second straight session.
 "It's a very weak day in general for the U.S. dollar, so on
these kind of days, Canada's underperforming on the crosses but
still able to eke out some gains against the U.S. dollar," said
Sacha Tihanyi, currency strategist at Scotia Capital.
 "As we seen in the past month, it's been a restrained
trading range for the Canadian dollar in general."
 Analysts were eyeing a daily range of C$0.9960-C$1.10 to
the U.S. dollar.
 No Canadian data is expected until the end of the week when
Statistics Canada releases the employment report for January,
and, on average, analysts expect a gain of 15,000 jobs in the
month, according to Reuters estimates. The jobless rate is
expected to remain steady at 7.6 percent. [ID:nN28144465]
 But the spotlight will be on Bank of Canada Senior Deputy
Governor Tiff Macklem, who is speaking in Alberta on Tuesday
and Wednesday about Canada's productivity.
 Macklem may repeat Governor Mark Carney's recent warnings
that a persistent strength in the Canadian dollar could
reinforce drag on trade, Tihanyi said. [ID:nN27191953]
 Prices for Canadian bonds were lower across the curve,
tracking their U.S. counterparts, as investors shifted their
focus from Middle East turmoil and global stocks were bid on
improved economic data and corporate results. [MKTS/GLOB]
 The U.S. Institute for Supply Management's (ISM) January
report on manufacturing activity, due at 1500 GMT, is expected
the main index at 58.0, reflecting expansion. ECONUS
 The two-year bond CA2YT=RR slipped 4 Canadian cents to
yield 1.691 percent, while the 10-year bond CA10YT=RR was
down 30 Canadian cents to yield 3.312 percent.
 (Reporting by Ka Yan Ng, Editing by Chizu Nomiyama)