CANADA FX DEBT-C$ firms as economic data hits greenback

Thu Apr 14, 2011 5:16pm EDT
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   * C$ closes higher at C$0.9598, or $1.0419
 * Bonds mostly firmer across the curve
 (Updates details, adds comments)
 By Solarina Ho
 TORONTO, April 14 (Reuters) - The Canadian dollar firmed on
Thursday as the greenback declined on weak economic data that
suggested that the U.S. Federal Reserve would have to stand pat
on its quantitative easing plan to boost the economy.
 The data showed that U.S. factories paid higher prices last
month as the disruption caused by Japan's earthquake began to
be felt. Also, weekly U.S. jobless claims came in higher than
expected, sparking concerns over the strength of the labor
market recovery. [ID:nN14146589]
 "I think USD/CAD is mostly being driven by what the U.S.
dollar is doing," said Jacqui Douglas, a currency strategist at
TD Securities.
 The currency CAD=D4 finished the day at C$0.9598 to the
U.S. dollar, or $1.0419, up from Wednesday's North American
close of C$0.9624 to the U.S. dollar, or $1.0391.
 The Canadian dollar fell in early dealings, hit by
weaker-than-expected Canadian manufacturing data for February
and early greenback strength against the euro that resulted
from renewed worries about euro-zone debt levels. [FRX/]
[ID:nN14146333] [ID:nLDE73D0XQ]
 "Throughout the day, I think those concerns subsided
somewhat and moved a little bit back toward the risk-on trade,
and that brought the USD/CAD back to C$0.9600, where we're
currently changing hands," said Darren Richardson, a corporate
dealer at CanadianForex.
 "Those macro factors will still be in the forefront. Any
developments in those situations will provide U.S. dollar
strength in the short term."
 Also providing some background support for the
commodity-linked Canadian dollar was a rebound in U.S. crude
prices. [O/R]
 With little news expected from Canada, market focus on
Friday will be on Chinese economic data and U.S. inflation
figures, both of which could drive direction for the U.S.
 Richardson said he expected the Canadian currency to trade
between C$0.9500 and C$0.9750 over the next few weeks.
 "It's very much going to be stable, with intermediate
flashes of U.S. dollar strength ... but with still the gradual
grinding lower against the Canadian (dollar)," he said.
 Separately, a Reuters survey of analysts around the globe
showed they think Canada's economic outlook has improved in
recent months, boosted by stronger commodity prices, though
they expect the pace of growth to slow slightly next year.
 Canadian government bond prices pulled back from early
highs, but were still mostly firmer across the curve, with the
two-year bond CA2YT=RR 1 Canadian cent higher to yield 1.820
percent. The 10-year bond CA10YT=RR was up 5 Canadian cents
to yield 3.365 percent.
 (Editing by Peter Galloway)