CANADA FX DEBT-C$ higher, but off peak hit on trade data

Tue May 12, 2009 9:57am EDT
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 * C$ rallies as high as 86.66 U.S. cents
 * Move triggered by strong Canadian trade data
 * Bond prices down across the curve
 (Adds details)
 By Frank Pingue
 TORONTO, May 12 (Reuters) - The Canadian dollar was higher
versus the U.S. dollar on Tuesday morning but off the high it
hit after data showed Canada's March trade surplus was more
than double what the market had expected.
 The Canadian dollar rallied as high as C$1.1540 to the U.S.
dollar, or 86.66 U.S. cents, moments after the data, which put
if comfortably above C$1.1658 to the U.S. dollar, or 85.78 U.S.
cents, at Monday's close.
 The boost in the currency followed a report that showed the
trade surplus in March rose to C$1.11 billion, due largely to
lower energy imports. [ID:nN11501985]
 But the currency was unable to generate momentum and crack
through the six-month high it hit during Monday's North
American session.
 By 9:35 a.m. (1335 GMT), the Canadian dollar unwound the
post data gains, falling to C$1.1588 to the U.S. dollar, or
86.30 U.S. cents, from C$1.1583 to the U.S. dollar, or 86.33
U.S. cents, ahead of the trade report.
 "Definitely good results for the trade, not outrageously
good ... data is not having as material an impact as it had in
the past but certainly a little bit positive," said Steve
Butler, director of foreign exchange trading at Scotia
 Butler said the Canadian dollar has some catching up to do
with other commodity-linked currencies such as the Australian
and New Zealand dollars.
 Helping to cushion the Canadian dollar's turn lower was a
rise in the price of oil, a key Canadian export, which hit $60
a barrel for the first time since November. [ID:nSIN472267]
 Other factors keeping the Canadian dollar from slipping
further were economic reports from Britain and China that
bolstered the view that the global recession is easing, which
lessened safe-haven demand for the U.S. dollar.
 The next economic indicator that could influence the
Canadian dollar is Friday's Canadian manufacturing survey for
 Bond prices were pinned lower across the curve,
relinquishing a chunk of the gains made during the previous
session, as the trade data left investors with less interest in
secure government debt.
 North American equities opened higher as investors moved
back into riskier assets after they tumbled in the previous
 The benchmark two-year Canadian government was down 3
Canadian cents at C$100.30 to yield 1.101 percent, while the
10-year bond slipped 20 Canadian cents to C$105.35 to yield
3.126 percent.
 The 30-year bond was off 55 Canadian cents at C$118.40 to
yield 3.914 percent.
 (Editing by Peter Galloway)