4 Min Read
* C$ slightly lower at 95.91 U.S. cents
* Bonds mixed across the curve
(Updates to close, adds details, quotes)
By Claire Sibonney
TORONTO, Feb 22 (Reuters) - The Canadian dollar weakened on Monday after rising to a one-month high early in the session but a lack of economic data and mixed commodity markets kept the currency close to the unchanged mark.
The price of oil, which often influences the commodity-linked currency, rose slightly to over $80 a barrel, but gold edged lower as risk appetite eased and the dollar hit a session high against the euro amid renewed worries about Greek debt. [O/R] [GOL/]
With no major Canadian or U.S. economic data releases for the day, trading in the Canadian dollar was light.
"The Canadian dollar was modestly softer today but only marginally," said Millan Mulraine, an economics strategist at TD Securities.
"It's a reflection of a broader behavior of currencies across the globe with investors more or less sitting on their hands right now waiting for the next piece of economic news."
Mulraine said markets will listen closely to U.S. Federal Reserve Chairman Ben Bernanke's semiannual congressional testimony for more clues on monetary policy as well as a slew of U.S. housing data later in the week.
"That will certainly provide a fairly good gauge of not only the state of the U.S. housing market but it will also be a good reflection of the health of U.S. consumer household balance sheets and the economy as a whole," he said.
The Canadian dollar closed at C$1.0426 or 95.91 U.S. cents, down from Friday's close at C$1.0405 or 96.11 U.S. cents. Earlier the Canadian currency strengthened to C$1.0371 or 96.42 U.S. cents, its highest since Jan. 20.
SHORT-TERM BONDS RISE
Canadian government bonds were mixed across the curve, as fixed-income markets continued to digest last week's news about the Fed raising its discount lending rate and tame U.S. inflation.
The two-year Canadian government bond CA2YT=RR added 4 Canadian cents at C$100.245 to yield 1.376 percent, while the 10-year bond CA10YT=RR fell 8 Canadian cents to C$101.910 to yield 3.507 percent.
"I think it's a continuation of what we saw on Friday when we had really benign inflation report out of the U.S. which would suggest that the Fed will continue to have considerable room for keeping rates accommodative and in some ways I think investors are continuing to be buoyed by that at the short end," said Mulraine.
"The longer the Fed stays on hold the more inflation pressures will build up in the longer end," said Mulraine.
Longer-dated U.S. Treasuries also fell on Monday as relatively soft demand in an auction of 30-year inflation-protected bonds added to uncertainty over the market's ability to absorb record new issuance this week. [US/]
In new issue news, the Bank of Canada said on Monday it would auction C$2.5 billion of 8-day treasury bills on Feb. 24. [ID:nTOR007209]
(Reporting by Claire Sibonney; Editing by Frank McGurty)