CANADA FX DEBT-C$ dips, hurt by weak US data, bonds mixed

Thu Aug 13, 2009 5:11pm EDT
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 * C$ ends a touch lower at 91.83 U.S. cents
 * Contrasting European and U.S. data spur swings
 * Bond prices mixed as stocks gain, supply absorbed
 By Ka Yan Ng
 TORONTO, Aug 13 (Reuters) - The Canadian dollar closed
slightly lower against the greenback on Thursday after trading
in a wide range on contrasting economic data from Europe and
the United States.
 The currency traded as high as C$1.0792, or 92.66 U.S.
cents, rising with U.S. stock market futures after Wal-Mart
Stores Inc (WMT.N: Quote) reported second-quarter results that topped
Wall Street's expectations. [ID:nN13324438]
 But that gain was erased after some disappointing U.S. data
offset the Wal-Mart news and pulled the Canadian dollar as low
as  C$1.0911, or 91.65 U.S. cents.
  U.S. retail sales dipped an unexpected 0.1 percent in
July. [ID:nN12109251] Data also showed the weak U.S. labor
market struggled to stabilize with the latest jobless claims
rising slightly last week. [ID:nN13489469]
  "There's been some volatility but at the end of the day
we've pretty much come back to fairly neutral levels on a net
change from where we were yesterday," said George Davis, chief
technical analyst at RBC Capital Markets.
"The retail sales numbers were weaker than expected. That
poured some cold water on the (U.S.) equity market rally, which
in turn pushed risk aversion levels higher," he added.
 Lifting the Canadian dollar off its low were reports that
showed the euro zone's two biggest economies, Germany and
France, defied expectations with returns to growth in the
second quarter. That pushed the U.S. dollar against lower
[ID:nLD331672] a raft of currencies.
 The Canadian dollar was one of the softest performers among
major currencies against the U.S. dollar on Thursday. Its 0.1
percent fall paled in comparison to the more than 1 percent
rise in its sister commodity currencies, the Australian and New
Zealand dollars.
  At session's end, the currency was at C$1.0890 to the U.S.
dollar, or 91.83 U.S. cents, down slightly from C$1.0884 to the
U.S. dollar, or 91.88 U.S. cents, at the close on Wednesday,
when it snapped a four-day skid.
 A surge in Canadian equities, stronger U.S. stocks, and the
surprising economic growth data overseas contributed to
slightly lower Canadian bond prices at the short end.
 But longer-term maturities rose with their U.S.
counterparts as investors snapped up a record $15 billion of
30-year U.S. government bonds in the third and final leg of the
Treasury's $75 billion quarterly refunding. [ID:nN13543887]
 The two-year Canadian bond was off 2 Canadian cents at
C$99.33 to yield 1.334 percent, while the 10-year bond rose 8
Canadian cents to C$101.98 to yield 3.509 percent.
 The 30-year bond gained 35 Canadian cents to C$117.05 to
yield 3.980 percent. In the United States, the 30-year bond
yielded 4.424 percent.
 Canadian bonds underperformed their U.S. counterparts
across most of the curve, except in the three-year maturity.
The Canadian 30-year bond was about 44.4 basis points below the
U.S. 30-year yield, versus 53.5 basis points on Wednesday.
 (Editing by Peter Galloway)