CORRECTED-CANADA FX DEBT-C$ steps back after disappointing N.American data
(Corrects to show prices of new homes in December where higher versus a year earlier) * C$ hits session low of C$0.9969 vs US$, or $1.0031 * Bond prices little changed across curve By Claire Sibonney TORONTO, Feb 7 (Reuters) - The Canadian dollar drifted to a session low against its U.S. counterpart on Thursday after weak North American data reminded investors there were still many headwinds for economic growth. Canadian building permits posted their biggest two-month drop in at least 24 years in December, though prices of new homes ended the year 2.3 percent higher than December 2011. In the U.S., initial jobless claims fell less than expected in the latest week and U.S. productivity dropped sharply in the fourth quarter. Following the flurry of reports, Canada's currency hit a session low of C$0.9969 versus the greenback, or $1.0031, from around C$0.9957, or $1.0043, immediately before the data. The currency, however, was not much weaker than Wednesday's close, and has remained in a narrow 60-odd-point range this week between C$0.9932-69 The European Central Bank's decision to leave rates on hold similarly had little impact. "The direct impact is on the euro but not much spillover anywhere else," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. "In all honesty (the Canadian dollar) is probably sidelined as everybody is watching ... the ECB and their attitude to the exchange rate and potential policy changes." Markets were still assessing comments from ECB President Mario Draghi at a news conference about how the currency's gains might affect the fragile euro zone economy. At 9:40 a.m. (1440 GMT), the Canadian dollar stood at C$0.9962, or $1.0038, slightly weaker than Wednesday's North American session close at C$0.9955, or C$1.0045. Cole also noted that traders would be closely monitoring Canada's critical employment report for January due on Friday. A Reuters poll released on Wednesday showed economists and foreign exchange strategists expected the Canadian dollar to strengthen over the course of 2013, looking past the Bank of Canada's recent dovish comments and finding support from an improving U.S. economy. Canadian government bond prices were little changed across the curve, with the two-year bond flat to yield 1.160 percent, and the benchmark 10-year bond off 11 Canadian cents to yield 2.003 percent. (Reporting by Claire Sibonney; Editing by Theodore d'Afflisio)
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