CANADA FX DEBT-C$ flat with inflation data as expected

Fri Jul 17, 2009 8:15am EDT
 
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 * C$ sticks in tight range after CPI data
 * Inflation rate turns negative in June
 * Bond prices higher across the curve
 By Frank Pingue
 TORONTO, July 17 (Reuters) - Canada's currency was flat
versus the U.S. dollar on Friday as domestic inflation data
came in as expected while nagging concerns over the global
economic outlook kept it from adding to recent gains.
 The Canadian dollar barely budged after data showed the
annual inflation rate turned negative in June for the first
time since November 1994 at a pace that was right in line with
forecasts in a Reuters survey of analysts. [ID:nN17405438]
 "I don't think there is any surprise that's come out of
this so I wouldn't imagine that financial markets will be all
that aggressive in their response," said Eric Lascelles, chief
economics and rates strategist at TD Securities.
 The Canadian dollar dipped to C$1.1181 to the U.S. dollar,
or 89.44 U.S. cents, immediately after the 7:00 a.m. (1100 GMT)
inflation report from a pre-data level of C$1.1178 to the U.S.
dollar, or 89.46 U.S. cents.
 By 7:55 a.m. the Canadian dollar was at C$1.1180 to the
U.S. dollar, or 89.45 U.S. cents, down from C$1.1172 to the
U.S. dollar, or 89.51 U.S. cents, at Thursday's close.
 The Canadian dollar had been on a charge earlier this week,
at one point up 4.8 percent at its highest level in more than a
month, before easing slightly in Thursday's session.
 Nagging concerns about the pace of a rebound in the global
economy forced the Canadian dollar to relinquish some of its
gains as demand for key Canadian commodities is closely linked
to the health of the global economy.
 Traders may also be avoiding major commitments in the lead
up to Tuesday's Bank of Canada rate announcement and Thursday's
Monetary Policy Report, when a forecast of a slightly less
dismal economy could surface. [ID:nN15348944]
 Domestic bond prices were up across the curve, underpinned
by continued safe-haven demand as investors fretted about the
impact of the possible bankruptcy of lender CIT Group CIT.N.
 (Editing by Jeffrey Hodgson)