4 Min Read
* C$ in 34-point range, rises to $1.0308
* Bond prices lower as equities rise
* Canada January building permits fall unexpectedly
By Ka Yan Ng
TORONTO, March 7 (Reuters) - Canada's dollar CAD=D4 edged higher against the greenback on Monday, while keeping to a narrow range, helped by a jump in the price of oil caused by unrest in Libya and concern of wider supply disruptions.
U.S. crude futures CLc1, an influential factor for the commodity-linked Canadian dollar, reached the highest since September 2008. Brent crude also added to gains as fighting in Libya disrupted its supplies. [O/R]
"With oil up here, people are happy to maintain their long Canadian positions," said John Curran, senior vice president at CanadianForex.
By 9:30 a.m. (1430 GMT), the currency was just shy of the session high at C$0.9701 to the U.S. dollar, or $1.0308, up from Friday's North American session close at C$0.9717 to the U.S. dollar, or $1.0291.
The Canadian currency hit a session high of C$0.97 to the U.S. dollar, or $1.0309, but pulled back slightly after a report that the overall value of Canadian building permits unexpectedly dropped by 5.1 percent in January from December. [ID:nN0730031]. But that move was shortlived.
"The market looks like they're just letting this one slide for the time being," Curran added. For now, he said key levels included C$0.9680-C$0.9710, initial U.S. dollar support, while C$0.9780 marks the first U.S. dollar resistance point.
The session low was at C$0.9734, making for a 34-point range so far on Monday.
Canadian government bonds were lower across the curve with equities on the rise. The two-year bond CA2YT=RR fell 5 Canadian cents to yield of 1.871 percent, while the 10-year bond CA10YT=RR slipped 22 Canadian cents to yield 3.363 percent.
HOUSING, JOBS DATA AHEAD
Several more pieces of data this week will help determine the strength of the domestic economic recovery and market pricing on the Bank of Canada's next interest rate hike.
Housing starts, due on Tuesday, could show whether the sector continues to be a drag on overall growth after being a main factor pulling the economy from recession.
Trade data for January on Thursday, as well as the February reading on the jobs market on Friday, are the main attractions this week as market players look to see whether both pieces of data can repeat the unexpected strength from their previous months.
Canada's surprise return to a trade surplus in December prompted hopes of an export recovery as well and put the prospect of a Bank of Canada interest rate hike back on the radar.
A modest pace of job creation would also support momentum in the economic recovery.
But if any of the data are weaker, the Canadian dollar may follow suit and weigh on anticipation of an interest rate hike before midyear, analysts said.
The central bank has stayed on the sidelines since September after three consecutive rate increases last year brought its benchmark rate to a still-low 1 percent.
Overnight index swaps, which trade based on expectations for the key central bank rate, imply a fully priced-in rate increase on the bank's Sept. 7 decision date. BOCWATCH (Editing by Jeffrey Hodgson)