CANADA FX DEBT-C$ softer on China data, commodities

Mon Jan 10, 2011 8:16am EST
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 * C$ softer at C$0.9969
 * Bonds firmer across curve
 By Claire Sibonney
 TORONTO, Jan 10 (Reuters) -  The Canadian dollar held above
parity against the greenback on Monday morning but returned
some of last week's gains as risk appetite suffered on the back
of weaker Chinese data and softer commodity prices.
 China's trade surplus fell 6 percent to $183 billion last
year, the latest evidence it is making progress in rebalancing
its economy toward domestic consumption and cutting reliance on
exports, such as Canada's, with demand for base metals falling.
 "It's generally commodity FX weakness," said Elsa Lignos,
G10 currency strategist at RBC Capital Markets in London.
 "On the day it's underperforming alongside the commodity
currencies, but the moves aren't huge."
 Copper in particular slid 1 percent as investors worried
about debt problems in Europe and a rising U.S. dollar made
metals more expensive for non-U.S. investors. [MET/L]  
 At 8:02 a.m. (1302 GMT), the currency CAD=D4 stood at
C$0.9969 to the U.S. dollar, or $1.0031, down from Friday's
North American finish at C$0.9918 to the U.S. dollar, or
 Lignos pointed to short-term support for the U.S. dollar
still at last week's low of C$0.9889, with resistance at
 Later in the day, the Bank of Canada's business outlook and
loan officer surveys and a speech from Deputy Governor Agathe
Cote could provide further direction, but Lignos said broader
global risk appetite will provide most of the impetus for the
 "More likely we're going to be stuck around these levels,
trading around parity," she said.
 Canadian bond prices were slightly stronger across the
curve as North American equities pointed down. [US/]
 The two-year bond CA2YT=RR was up half a Canadian cent to
yield 1.708 percent, while the 10-year bond CA10YT=RR  added
10 Canadian cents to yield 3.171 percent.
  (Reporting by Claire Sibonney, Editing by Chizu Nomiyama)