CANADA FX DEBT-C$ gets lift after Canada, U.S. GDP data

Thu Sep 30, 2010 9:29am EDT
 
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   * C$ touches high of 97.75 U.S. cents
 * Bonds flat to lower; eyes on Carney
 By Jennifer Kwan
 TORONTO, Sept 30 (Reuters) - Canada's dollar rose against
its U.S. counterpart on Thursday after domestic data showed
economic contraction was not worse than market expectations,
while U.S. data showed growth was a touch higher.
 The Canadian dollar CAD=D4 rose as high as C$1.0230 to
the U.S. dollar, or 97.75 U.S. cents following the GDP
reports.
 Canada's economy contracted for the first time in a year in
July on weakness in manufacturing, construction and retail,
adding to reasons the Bank of Canada could pause its interest
rate hike campaign. [ID:nN30434455]
 The currency likely got a lift because many market players
expected the number to come in lower than consensus estimates,
particularly after Canada's Finance Minister on Wednesday
warned on the potential for a negative reading [ID:nN2996628],
said Camilla Sutton, chief currency strategist at Scotia
Capital.
 Also supportive was U.S. data that showed economic growth
was a touch higher in the second quarter than previously
estimated due to upward revisions to consumer spending and
business inventories. [ID:nN29279871]
 "We had a stronger GDP Q2 revision in the U.S., which is
good for Canada in the sense that if the outlook for the U.S.
is firming somewhat that takes away one of the biggest fears
for the Canadian outlook," said Sutton.
 At 9:15 a.m. (1315 GMT), the currency was at C$1.0252 to
the U.S. dollar, or 97.54 U.S. cents, up from Wednesday's
finish at C$1.0340 to the U.S. dollar, or 96.71 U.S. cents.
 The currency moved higher as the greenback slumped, while
oil, gold and equity prices climbed. [FRX/] [GOL/] [.N]
[MKTS/GLOB]
 As well, the potential for "month-end flows" will likely
also keep the currency higher as money managers rebalance their
portfolios, said Sutton.
 Canadian government bond prices were mostly lower,
following U.S. Treasuries, which pared gains after U.S. data.
[US/]
 The next key event on Thursday for Canada will be
commentary from Bank of Canada Governor Mark Carney, who will
give a speech entitled "Employment in a Modest Recovery."
 The two-year bond CA2YT=RR slumped 5 Canadian cents to
yield 1.409 percent, while the 10-year bond CA10YT=RR sank 12
Canadian cents to yield 2.752 percent.
 (Reporting by Jennifer Kwan; editing by Jeffrey Hodgson)