CANADA FX DEBT-C$ dips briefly after weak U.S. data

Thu Jan 27, 2011 9:30am EST
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 * 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
 "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
 "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
 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)