4 Min Read
(Corrects closing figures in first bullet point)
* C$ closes at C$0.9932 to the U.S. dollar, or $1.0068
* Bond prices firmer across the curve
* Market focus on upcoming U.S and Canadian GDP data (Adds details, comments)
By Solarina Ho
TORONTO, Jan 27 (Reuters) - The Canadian dollar firmed against the greenback on Thursday, shrugging off weakness in equities and softer resource prices, which would normally pull the currency lower.
Trading was light, however, and the Canadian dollar stayed well within its recent C$0.99-to-parity range ahead of key economic data on Friday and next week.
"We're seeing some slight pickup in Canada buying, particularly on the crosses, which is generating some flow with respect to offers in USD/CAD," said Jack Spitz, managing director of foreign exchange at National Bank Financial.
"Look at Canada as more or less an oasis of stability within a relatively volatile market around it ... The Canadian dollar seems to be taking the global macro risks that are being put on the table from time to time in good stride."
Spitz noted that the currency has remained relatively stable despite a downgrade of Japan's long-term debt rating on Thursday, ongoing concerns over European financial stability, and the U.S. Federal Reserve's decision to leave interest rates near zero. [ID:nL3E7CR0Q5] [ID:nLDE70Q02C]
The currency CAD=D4 finished the day at C$0.9932 to the U.S. dollar, or $1.0068, up from Wednesday's North American finish of C$0.9953, or $1.0047.
The currency fell as low as C$0.9987, or $1.0013, in the morning after data showed that new U.S. claims for jobless benefits surged last week. [ID:nN27280337]
"At this point, with not really much data out of Canada, you can't really be surprised with this kind of range-bound trading, especially with the U.S. numbers being mixed," said Benjamin Reitzes, an economist at BMO Capital Markets.
The United States will issue fourth-quarter gross domestic product data on Friday and markets will look for clues to the health of the world's biggest economy. Strength in the United States would bode well for Canada, its biggest trading partner.
"Tomorrow's GDP numbers may mean a little bit more to the Canadian dollar and the currency markets as a whole to see where the U.S. economy is heading," Reitzes said.
Next week a slew of Canadian data, starting with the November GDP figures on Monday and culminating with January jobs numbers on Friday, will provide more direction for the 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 Canadian currency rising to 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 cents 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 Peter Galloway)