CANADA FX DEBT-C$ firms as economic data hits greenback
* 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. dollar.
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. [ECILT/CA]
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)
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