CANADA FX DEBT-C$ takes breather after nearing 15-mth high

Thu Oct 15, 2009 8:14am EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

   * C$ hits highest level since July 2008
 * Looming data and rate decision in focus
 * Bond prices mixed across curve
 By Frank Pingue
 TORONTO, Oct 15 (Reuters) - Canada's currency slid against
the U.S. dollar on Thursday and backed off a near 15-month high
reached overnight as looming domestic inflation data and an
expected interest rate announcement forced traders to
reposition.
 During the overnight session, the Canadian currency CAD=
rose to C$1.0207 to the U.S. dollar, or 97.97 U.S. cents, which
marked its highest level since July 2008.
 The rally built on momentum from Wednesday's North American
session after upbeat U.S. corporate results boosted investor
optimism about a global recovery as well as risk appetite.
 But the move was reversed ahead of Canadian consumer prices
data for September due Friday and next week's Bank of Canada
rate announcement, when investors will look closely for clues
about the timing of the next rate hike.
 The turnaround in the Canadian dollar follows a mostly
uninterrupted rise this month that left it within striking
distance of rising above the U.S. dollar for the first time
since July 2008.
 "Things have been too perfect for the Canadian dollar for
the past little while, and so it needs to have a period of
retrospection, and I think that's what we are getting now,"
said David Watt, senior currency strategist at RBC Capital
Markets.
 "Is it really an environment where you want to drive the
Canadian dollar to parity and potentially force the Bank of
Canada's hand, or just say it's been a nice run. Now let's take
it back to a more reasonable level at the present time."
 At 8:00 a.m. (1200 GMT), the Canadian unit was at C$1.0331
to the U.S. dollar, or 96.80 U.S. cents, down from C$1.0259 to
the U.S. dollar, or 97.48 U.S. cents, at Wednesday's close.
 Domestic bond prices were mixed across the curve ahead of
data expected to show Canadian factory sales fell 0.4 percent
in August from July. In July, factory sales surged 5.5 percent
from the prior month.
 (Editing by Jeffrey Benkoe)