CANADA FX DEBT-C$ up as housing starts come in strong

Wed Apr 8, 2009 10:43am EDT
 
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 * C$ rises as high as 81.24 U.S. cents after housing data
 * Housing starts rise 13.7 in March, beat forecasts
 * Bonds mostly higher, track U.S. Treasuries
 (Adds details, quotes)
 By Jennifer Kwan
 TORONTO, April 8 (Reuters) - A steadier tone on equity
markets and an unexpectedly strong rise in Canadian housing
starts in March helped lift the Canadian dollar against the
greenback on Wednesday.
 Housing starts rose 13.7 percent in March -- snapping a
six-month losing streak -- to a seasonally adjusted rate of
154,700 units. That beat the consensus expectations of analysts
for 130,000 starts. [ID:nN08489392]
 "It was better than expected, it did not deteriorate
further, it adds to the growing body of evidence that the
Canadian economy actually did OK in March," Doug Porter, deputy
chief economist at BMO Capital Markets, said of the data.
 "I think it has raised some hopes that perhaps even the
employment number tomorrow may not be quite as bad as initially
advertised."
 The week's key piece of economic data comes on Thursday
with Canada's March jobs figures.
 The Canadian economy is expected to have shed 55,000 jobs
in March following a loss of 82,600 jobs in February. A loss of
that magnitude would further support the widespread view that
the economy contracted sharply in the first quarter of 2009.
 Also supporting the Canadian dollar on Wednesday were
steadier equity markets.
 "(Steadier equities) imply lower levels of risk aversion.
That tends to be another positive factor for the Canadian
dollar," said George Davis, chief technical strategist RBC
Capital Markets.
 At 9:49 a.m. (1349 GMT), the currency was at C$1.2327 to
the U.S. dollar, or 81.12 U.S. cents, up from C$1.2378 to the
U.S. dollar, or 80.78 U.S. cents at Tuesday's close.
 BOND PRICES MOSTLY HIGHER
 Canadian government bond prices were mostly higher,
tracking U.S. Treasuries, as concern that corporate earnings
will be poor in the current reporting season fueled demand for
safer government bonds.
  U.S. government bonds rose on Wednesday ahead of the
Federal Reserve's next round of Treasuries buying later in the
day, which eased supply concerns. [ID:nL8408504]
 "It's just largely tracking what we're seeing in
Treasuries," Porter said.
 The two-year Canada bond was up 2 Canadian cents at
C$100.29 to yield 1.114 percent, while the 10-year bond sagged
3 Canadian cents to C$106.97 to yield 2.948 percent.
 The 30-year bond was higher by 20 Canadian cents at
C$123.45 to yield 3.658 percent. In the United States, the
30-year Treasury yielded 3.6934 percent.
 (Reporting by Jennifer Kwan; editing by Peter Galloway)