CANADA FX DEBT-C$ firms in light trade; eyes on upcoming data

Thu Jan 27, 2011 3:24pm EST
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   * C$ up at C$0.9936 per U.S. dollar, or $1.0064
 * Bond prices firmer across the curve
 * Focus on upcoming U.S and Canadian GDP data
 (Adds details, comment)
 By Solarina Ho
 TORONTO, Jan 27 (Reuters) - The Canadian dollar
strengthened against the U.S. currency on Thursday, spurred by
a pick-up in buying of Canadian dollars and light trading ahead
of U.S. and Canadian economic data tomorrow and next week.
 Weakness in equities and softer resource prices -- normally
drivers for the Canadian dollar -- were having little effect as
the currency firmed, but still within the parity to C$0.99
 "Look at Canada as more or less an oasis of stability
within a relatively volatile market around it," said Jack
Spitz, managing director of foreign exchange at National Bank
 "The Canadian dollar seems to be taking the global macro
risks that are being put on the table from time to time in good
 The currency has remained relatively stable despite a
downgrade of Japan's long-term debt rating, ongoing concerns
over European financial stability, and the Federal Reserve's
decision to leave interest rates unchanged near zero, Spitz
 "There's significantly less volatility in USD/CAD than
there appears to be in other currency pairs."
 At 2:48 (1948 GMT), the currency CAD=D4 stood at C$0.9936
to the U.S. dollar, or $1.0064, up from Wednesday's North
American finish at C$0.9953, or $1.0047.
 The U.S. will issue forth-quarter gross domestic product
data on Friday and investors will look for clues the health of
the world's biggest economy. Strength in the United States
generally bodes well for Canada, its biggest trading partner.
 Next week, a slew of Canadian data, kicking off with the
GDP figures and culminating in the job numbers on Friday will
provide more direction for the range-bound currency.
 "It's not likely to trade between C$0.99 and parity for
much longer. The market will break it out. I think the
break-out is likely to be toward U.S. dollar weakness and
Canada strength," said Spitz, who sees the break-out to be
around the C$0.9837 level.
 Canadian bond prices were firmer across the curve.
 The two-year bond CA2YT=RR was up 2.5 Canadian cent to
yield 1.738 percent, while the 10-year bond CA10YT=RR climbed
29 Canadian cents to yield 3.278 percent.
 (Reporting by Solarina Ho; editing by Rob Wilson)