3 Min Read
* C$ falls to $1.0026 after U.S. data
* U.S. jobless claims surge, durable goods orders fall
* Bonds cut losses across curve
(Updates with details, commentary)
By Claire Sibonney
TORONTO, Jan 27 (Reuters) - The Canadian dollar softened against the greenback on Thursday after U.S. economic data came in weaker than expected but still held within a tight range above parity.
New U.S. claims for jobless benefits surged last week as snowstorms in some parts of the country kept workers at home, but the underlying trend pointed to an only gradual labor market improvement. [ID:nN27280337]
A separate report from the Commerce Department showed a nearly 100 percent drop in civilian aircraft orders led to orders for long-lasting manufactured goods dropping 2.5 percent in December.
The currency CAD=D4 fell to C$0.9974 to its U.S. counterpart, or $1.0026, immediately following the data, down from C$0.9955 to the U.S. dollar, or $1.0045, heading into the release.
"Short-term, it was negative for the Canadian dollar but I think the market will forget about it pretty quickly," said David Bradley, director of foreign exchange trading at Scotia Capital,
"For dollar/Canada to trade much higher you'd have to really see a big sell-off in the commodity sector or something like that ... gold breaking below $1,300 or oil breaking below $85."
At 9:13 a.m. (1413 GMT), the Canadian dollar CAD=D4 was perfectly flat compared with Wednesday's North American finish at C$0.9953 to the U.S. dollar, or $1.0047.
Bradley said beyond parity, the bigger resistance level for the U.S. dollar is C$1.0030-35. The support level in focus was C$0.9925, but he expected the currency pair to stay in its narrow range for the day.
"Dollar/Canada is really stuck. ... We've closed every day this year so far below parity. We've only managed to break above parity on four or five occasions over the course of the month," he said.
"There's just plenty of demand for Canadian dollars, there's a lot of foreign interest from sovereign wealth funds and central bank types ... so that's helping the Canadian dollar maintain its bid tone."
Overnight, the currency hardly budged despite the surprise news that Standard & Poor's downgraded Japan's long-term sovereign debt and hawkish policy talk in Europe after an ECB official warned that imported goods inflation could not be ignored. [MKTS/GLOB]
Canadian bond prices erased much of their earlier losses, following direction in Treasuries after the U.S. data.
The two-year bond CA2YT=RR was down half a Canadian cent to yield 1.753 percent, while the 10-year bond CA10YT=RR was off 8 Canadian cents to yield 3.324 percent.
(Reporting by Claire Sibonney)