CANADA FX DEBT-C$ ends weaker, strong data curbs losses

Tue Nov 15, 2011 4:45pm EST
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 * C$ ends lower at C$1.0208 vs US$, or 97.96 U.S. cents
 * Strong Canadian, U.S. data bolsters C$
 (Updates to close, adds comment)
 By Jennifer Kwan
 TORONTO, Nov 15 (Reuters) - The Canadian dollar ended
slightly lower against the U.S. currency on Tuesday, pulled
down by investor concern that policymakers will have troubles
containing the euro zone's debt troubles.
 But the Canadian dollar's drop was cushioned by strong
domestic data that showed manufacturing sales rose twice as
fast as expected in September to the highest level since
October 2008, sealing expectations for robust third-quarter
economic growth. [ID:nN1E7AE09Q]
 Data that offered hope that the U.S. economy would avoid
another recession also lifted sentiment. Retail sales were
stronger-than-expected in October while activity in the New
York manufacturing sector rose in November, ending five
straight months of contraction. [ID:nN1E7AE0A0]
 "We've seen a pretty decent retracement in terms of our
profile coming out of the European session. It was one
dominated by continued and persistent concerns on the EU
periphery," said Stewart Hall, senior currency strategist at
RBC Capital Markets.
 "But certainly as we moved into North America we got that
good punch of positive data out of both the U.S. and Canada."
 The Canadian dollar CAD=D4 briefly strengthened against
the U.S. currency after the data, hitting C$1.0204 to the
greenback, or 98.00 U.S. cents. This was up from about C$1.0236
before the report.
 The currency ended at C$1.0208 against the greenback, or
97.96 U.S. cents, down from C$1.0169 versus the U.S. dollar, or
98.34 U.S. cents on Monday.
 Market watchers said there is a fair amount of pessimism in
the global markets that could hit the Canadian dollar and its
commodity-linked peers given the uncertainty in Europe.
 "The expectations are that these countries are in dire
straits and a change in leadership doesn't necessarily change
the facts on the ground," said Firas Askari, head of foreign
exchange trading at BMO Capital Markets.
 RBC's Hall added: "Decoupling from that European story
would require a persistent reinforcement out of the U.S. that
things are getting better."
 Canadian government bond prices were flat to lower across
the curve. The move mimicked the broader market trend that saw
U.S. Treasuries slip as stock markets steadied, dampening the
bid for safe-haven U.S. government debt. [US/]
 "You've still got that risk-on, risk-off dynamic. You've
got a more positive economic story beginning to manifest itself
and that would be part of it," said Hall.
 The two-year bond CA2YT=RR ticked 1 Canadian cent higher
to yield 0.906 percent, while the 10-year bond CA10YT=RR
dropped 8 Canadian cents to yield 2.129 percent.
 (Editing by Jeffrey Hodgson)