CANADA FX DEBT-C$ firms but can't break out of range

Wed Jan 26, 2011 5:29pm EST
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   * C$ firms to C$0.9953, or $1.0047
 * Bonds mixed, follow U.S. Treasuries
 By Solarina Ho
 TORONTO, Jan 26 (Reuters) - The Canadian dollar
strengthened against the greenback on Wednesday, riding higher
on a rally in commodities and Canadian equities but unable to
break out of its recent trading range.
 The Canadian dollar finished at C$0.9953 to the U.S.
dollar, or $1.0047, up from Tuesday's North American close of
C$0.9976, or $1.0024.
 "It's been very, very quiet. We've been trapped in a
neutral trading range between C$0.99 on the (U.S. dollar)
downside and parity on the (U.S. dollar) top side, since Jan.
20," said George Davis, chief technical strategist at RBC
Capital Markets.
 "Unfortunately, the market can't really decide which way it
wants to go."
 The commodity-sensitive currency was helped by strength in
prices for oil, a key Canadian export. U.S. crude prices
rallied above $87 a barrel as President Barack Obama's call for
lower corporate taxes spurred hopes for higher profits and
greater energy demand. [O/R]
 The Canadian dollar also firmed after the U.S. Federal
Reserve left interest rates unchanged and pressed on with its
plan to buy $600 billion in government debt to stimulate the
economy. The Fed news also buoyed copper prices, and the
resource-heavy main index of the Toronto Stock Exchange closed
more than 1 percent higher. [.TO] [ID:nN25283937] [MET/L]
 Davis said the Canadian dollar needs to break either the
C$0.9995 support level or the C$0.9891 resistance level to
generate new direction.
 "Given the fact that we have seen a little bit of weakness
in the Canadian data of late ... I think there's a little bit
of reluctance to buy the Canadian dollar at these levels," he
 With no Canadian economic news scheduled for the remainder
of the week, all eyes are on November gross domestic product
numbers on Monday, which will kick off a data-heavy week that
will culminate with employment data on Friday Feb. 4.
 "If anyone's doing anything, they're doing it in the euro.
The Canadian dollar is not on the radar right now," said John
Curran, senior vice president at CanadianForex.
 "It's going to be hard for us to break out of any ranges
here ... until possibly the GDP. I doubt it unless GDP is
shocking, otherwise it'll go toward the employment data."
 Canadian bond prices were mixed with most lower, mimicking
movement in U.S. Treasuries. [US/]
 The two-year bond CA2YT=RR rose 0.4 Canadian cents to
yield 1.750 percent, while the 10-year bond CA10YT=RR lost 27
Canadian cents to yield 3.314 percent.
 "The market at this point still seems to favor playing
things from the bear side of the equation," Davis said.
 (Reporting by Solarina Ho; editing by Peter Galloway)