CANADA FX DEBT-C$ higher as strong building permits data boosts

Mon Dec 7, 2009 9:50am EST
 
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 * Canadian dollar up 94.73 U.S. cents
 * Bond prices higher across curve
 (Recasts, adds quote)
 By Jennifer Kwan
 TORONTO, Dec 7 (Reuters) - The Canadian dollar rose against
the U.S. currency on Monday morning, lifted by domestic data
that showed building intentions soared past analysts'
expectations in October.
 Statistics Canada said on Monday the value of building
permits shot up 18 percent from September due largely to
strength in nonresidential projects. Analysts in a Reuters poll
had forecast, on average, a mere 1 percent rise in the value of
building permits in October. [ID:nN073438]
 "We did have some pretty nice looking economic data at 8:30
in Canada and that might be doing some of the driving," said
Eric Lascelles, chief economics and rates strategist at TD
Securities. "No one had expected a number anywhere close to
that."
 At 9:21 a.m. (1421 GMT), the Canadian dollar was at
C$1.0556 to the U.S. dollar, or 94.73 U.S. cents, up from
Friday's finish at C$1.0579 to the U.S. dollar, or 94.53 U.S.
cents.
 Lascelles said the building permits report added to
Friday's robust jobs reading, which saw the economy add 79,000
jobs in November, five times more workers than expected in the
month in a stunningly upbeat jobs report that fueled
expectations of a pickup in economic growth. [ID:nN04141170]
 "With the Bank of Canada decision coming out tomorrow this
is very much an opportune time to bet on Canada if you think
it's going to translate into central bank action," he said.
 Still, the Bank of Canada is widely expected to keep its
hands off interest rates on Tuesday, holding them at near zero
and committing to do so until at least July, despite growing
evidence the economy is kicking back to life. [ID:nN07158839]
 Earlier in the morning, the Canadian currency was weaker,
weighed down by soft commodity prices and as the greenback
gained on investors expectations U.S. interest rates could rise
sooner than previously expected.
 Oil fell to below $75 a barrel on Monday while gold prices
were also lower. [O/R] [GOL/]
 The dollar hit a five-week high against a currency basket
on Monday, extending its rally from Friday when
stronger-than-expected U.S. jobs data fueled speculation the
Federal Reserve may consider winding down its stimulus measures
sooner than had been expected. [FRX/]
 "We've seen Fed fund futures starting to price in the
possibility of a hike even by the middle of (2010)," said
Matthew Strauss, senior currency strategist at RBC Capital
Markets.
 "On the back of those expectations following the job
numbers the U.S. dollar is really benefiting."
 The data showed U.S. employers cut a far
fewer-than-expected 11,000 jobs in November, well below
expectations of a 130,000 loss, while the unemployment rate
fell to 10 percent. [ID:nN04320079]
 BONDS EDGE HIGHER
 Canadian bond prices inched higher across the curve,
tracking U.S. Treasuries which steadied after Friday's sell-off
on the jobs data. [US/]
 The two-year government bond CA2YT=RR was up about 3
Canadian cents at C$99.99 to yield 1.255 percent, while the
10-year bond CA10YT=RR climbed 8 Canadian cents to C$103.55
to yield 3.31 percent.
 (Editing by Jeffrey Hodgson)