CANADA FX DEBT-Bernanke, data fail to lift C$ to parity

Fri Oct 15, 2010 9:44am EDT
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   * C$ little changed at 99.45 U.S. cents
 * Bonds prices mixed following Bernanke, data
 (Adds details, commentary)
 By Claire Sibonney
 TORONTO, Oct 15 (Reuters) - The Canadian dollar was little
changed after briefly firming and almost reaching parity
against its U.S. counterpart on Friday, following fresh signals
that the U.S. monetary policy could ease further.
 Federal Reserve Chairman Ben Bernanke said that high
unemployment and low inflation point to a need for more
stimulus, but he offered no details on the central bank's next
step. [ID:nN15187998]
 U.S. consumer price data for September, which came in
weaker than expected, also highlighted the risk of a
disinflationary environment, a key concern for the Fed.
 "There was a lot of anticipation about today's data and
speech but so far the U.S. dollar is slightly weaker than most
currencies so it seems that the market is somewhat comfortable
with that," said Camilla Sutton, chief currency strategist at
Scotia Capital.
 "I don't think we got any major surprises."
 The currency firmed as high as C$1.0012 versus the U.S.
dollar, or 99.88 U.S. cents, following Bernanke and the U.S.
data before pulling back.
 Also supportive for the Canadian dollar were Canadian
factory sales, which jumped more than expected in August.
 But Sutton stressed that the Canadian dollar is not
currently trading on its fundamentals.
 The Canadian dollar on Thursday briefly returned to a
one-for-one level with the U.S. dollar for the first time since
April as the greenback was pummeled to a 2010 low against a
basket of major currencies.
 "It's really not a CAD story like it was in the spring when
we went to parity, this is very much a U.S. dollar weakness
story," she said. "As soon as the U.S. dollar weakness story
fades that will immediately fade the rally in CAD."
 At 9:42 a.m. (1342 GMT), the Canadian dollar stood at
C$1.0064 to the U.S. dollar, or 99.36 U.S. cents, little
changed from Thursday's finish at C$1.0060 to the U.S. dollar,
or 99.40 U.S. cents.
 Canadian government bond prices were mixed following
Bernanke's speech and Canadian and U.S. data, with short-term
issues firmer and longer-term bond prices weakening.
 Canada's two-year bond CA2YT=RR was up 2 Canadian cents
to yield 1.428 percent, while the 10-year bond CA10YT=RR shed
27 Canadian cents to yield 2.795 percent.
 (Editing by Jeffrey Hodgson)