CANADA FX DEBT-C$ ends stronger ahead of CPI data; Europe eyed

Thu Oct 20, 2011 4:36pm EDT
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 * C$ ends at C$1.0150 vs US$, or 98.52 U.S. cents
 * Markets see-saw amid Europe uncertainty
 * Bonds mixed
 (Updates to close, adds comment)
 By Andrea Hopkins
 TORONTO, Oct 20 (Reuters) - The Canadian dollar ended
slightly stronger against its U.S. counterpart on Thursday as
markets ping-ponged in a wait-and-see mode before a weekend
policymaker meeting on Europe's debt crisis.
 The euro edged lower and oil prices rose in volatile trade
after France and Germany attempted to ease investor uncertainty
by saying Sunday's summit to address the crisis would go on and
a second meeting would be held no later than Wednesday.
 Concerns about the crisis were offset by data showing an
unexpected rebound in factory activity in the U.S. mid-Atlantic
region in October, buoying hopes for economic recovery by
Canada's largest trading partner. [MKTS/GLOB]
 "The Canadian dollar was an outperformer, up 0.6 percent on
the day while most of the other currencies are pretty flat,"
said Camilla Sutton, chief currency strategist at Scotia
 "But I think most currencies are kind of in a holding
pattern waiting for developments on the weekend, which now may
be pushed out to next week."
 The Canadian dollar CAD=D3 ended the North American
session at C$1.0150 to the U.S. dollar, or 98.52 U.S. cents, up
slightly from Wednesday's North American session close at
C$1.0202 to the U.S. dollar, or 98.02 U.S. cents.
 A German media report that Germany had not ruled out
postponing Sunday's summit poured more cold water on optimism
over the weekend meeting of EU leaders in Brussels.
 The news out of Europe kept investors on their toes.
Worries that the region's debt problems could cause another
global recession have been at the forefront for months.
 While European worries continue to dominate markets, Sutton
said Canadian inflation data due out at 7 a.m. (1100 GMT) on
Friday could influence Bank of Canada policy tone and the
currency if the data comes in outside of expectations.
 If the forecasts are correct, headline inflation will
remain above the Bank of Canada's target range of 1 percent to
3 percent. Core inflation, which excludes volatile items like
gasoline and some food, is right near the center of the band.
 An unexpected jump in the rate could support the Canadian
dollar and hurt bonds.
 Lower-than-expected inflation could prompt some to see a
rate cut as a more serious option for the central bank's next
move, dampening the value of the currency. [ID:nN1E79D19E]
 In economic news, Canadian wholesale trade grew by a
less-than-expected 0.2 percent in August from July, pushed
higher by the machinery, equipment and supplies sector,
Statistics Canada data indicated on Thursday. Analysts had
expected an increase of 0.5 percent. [ID:nN1E79J0B3]
 U.S. data showed factory activity in the U.S. Mid-Atlantic
region rebounded in October and the number of Americans
claiming new jobless benefits fell last week, fresh signs that
the economy was likely to duck a new recession.
 Canadian bond prices ended mixed. The two-year Canadian
government bond CA2YT=RR was down 1 Canadian cent to yield
1.042 percent, while the 10-year bond CA10YT=RR was up 15
Canadian cents to yield 2.321 percent.
 (Editing by Jeffrey Hodgson)