Canada dollar recedes, headed for weekly loss

Fri Jul 25, 2008 8:31am EDT
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 * Canadian dollar is trading in tight range
 * No domestic data due out to influence currency
 * Domestic bond prices mixed across the curve
 By Frank Pingue
 TORONTO, July 25 (Reuters) - The Canadian dollar eased
against the U.S. dollar on Friday given lingering effects of
lower equity markets, and with no key data to offer hope of a
rebound, it was headed for a weekly loss of about 1 percent.
 Domestic bond prices, with no Canadian data to trigger any
sort of move, were flat to slightly higher as dealers tried to
play catch-up with the bigger U.S. Treasury market.
 At 8:05 a.m. (1205 GMT), the Canadian unit was at C$1.0150
to the U.S. dollar, or 98.52 U.S. cents, down from C$1.0133 to
the U.S. dollar, or 98.69 U.S. cents, at Thursday's close.
 The dollar has dropped in the past three sessions given a
combination of weak Canadian data, weak European data that
offered a boost to the greenback, lower prices for key Canadian
exports like oil and gold and a sharp drop in equities.
 But despite the multi-day slide, the currency has remained
locked in a tight range versus its U.S. counterpart as light
summer trading conditions prevail.
 "It's all directionless for the Canadian dollar and it's
just bouncing around in ranges," said Adam Cole, head currency
strategist at RBC Capital Markets in London. "And there's no
new data trade off today so it's just a bit of follow-through
from yesterday's weakness and that's all really."
 The recent flow of data has weighed on the Canadian dollar,
most recently the domestic retail sales report early this week
that showed consumers were scaling back purchases.
 Canada's economic calendar will remain relatively quiet
until late next week when the key May gross domestic product
report is released.
 Until then, it appears likely that the Canadian dollar will
take direction from moves by the U.S. dollar and any data that
offers clues about the health of the global economy.
 Just this week, a slew of data out of Europe have shown a
softening economic performance and cooled expectations of
higher interest rates there.
 Canadian bond prices were mixed in the week's final
session, after lagging the rally staged by the bigger U.S.
Treasury market on Thursday.
 Weak equities and soft U.S. housing and employment numbers
drove up the safe-haven bid for government debt in the previous
session, but the rally in the Canadian bond market paled in
 "We had some real fireworks yesterday but they don't seem
to be translating through to today, at least not yet," said
Eric Lascelles, chief economics and rates strategist at TD
Securities. "So right now Canada is just playing a bit of catch
up to the U.S."
 The two-year bond was up 1 Canadian cent at C$101.13 to
yield 3.111 percent. The 10-year bond was off 6 Canadian cents
at C$103.70 to yield 3.795 percent.
 The yield spread between the two-year and 10-year bond was
68.4 basis points, up from 66.6 basis points.
 The 30-year bond dropped 5 Canadian cents to C$114.63 for a
yield of 4.127 percent. In the United States, the 30-year
treasury yielded 4.604 percent.
 The three-month when-issued T-bill yielded 2.48 percent,
unchanged from the previous close.