CANADA FX DEBT-C$ eases from 31-month high

Thu Jan 13, 2011 8:15am EST
 
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 * C$ dips to $1.0115
 * Bond prices drift lower
 By Claire Sibonney
 TORONTO, Jan 13 (Reuters) - The Canadian dollar softened
against the greenback on Thursday, trading in a tight range as
investors were reluctant to take the currency much past a
31-month high hit in the previous session.
 Still well above parity, the Canadian currency's movement
held in a narrow 30-basis-point range following Wednesday's
strong move, which marked the 12th straight session of gains as
it broke through a key resistance level.
 "The Canadian dollar is not likely to do much. It looks
like it's going to consolidate its recent gains," said Michael
O'Neill, managing director at Knightsbridge Foreign Exchange.
 O'Neill expects the currency to trade between C$0.9850 and
C$0.9940 for the rest of the session.
 "It's still basically the flavor of the year. As long as
oil is staying bid and the U.S. dollar regains some footing,
you should see some more selling of euro and buying of
Canada."
 Brent oil futures climbed toward $100 a barrel, piling
pressure on OPEC to raise production to prevent high prices
hurting the world economy. [O/R]
 At 7:55 a.m. (1255 GMT), the Canadian dollar CAD=D4 was
at C$0.9886 to the U.S. dollar, or $1.0115, slightly down from
Wednesday's North American close at C$0.9869 to the U.S.
dollar, or $1.0133.
 Some analysts believed the currency could slide before
climbing further, hurt by the reluctance of traders to test
near-record highs. For details, see [ID:nN12235221]
 North American trade data as well as U.S. jobless claims
and producer prices could provide further direction.
 However, O'Neill said the Canadian trade numbers should be
of little consequence. "In the big scheme of things ... as long
as it comes in as expected, it's really irrelevant. Canada is
still hostage to global developments."
 Canadian bond prices were down slightly, despite a pickup
in Treasuries and euro zone peripheral auctions passing without
a hitch.
 The two-year bond CA2YT=RR fell 2 Canadian cents to yield
1.762 percent, while the 10-year bond CA10YT=RR dropped 2
Canadian cents to yield 3.262 percent.
  (Reporting by Claire Sibonney; editing by Jeffrey Benkoe)