CANADA FX DEBT-C$ steady vs US$, rallies vs pound
* C$ at C$1.0261 versus US$, or 97.46 U.S. cents * Lack of domestic data limits trading impetus * C$ hits one-year low vs Aussie, strongest vs pound since June 2010 By Alastair Sharp TORONTO, March 12 (Reuters) - The Canadian dollar ended flat against its U.S. counterpart on Tuesday, with this week's lack of major domestic data expected to keep it in a tight range, even as it made significant moves against the British and Australian currencies. Volatility in the euro and yen gave currency markets their main price action in the session, with a wild swing in the euro zone common currency prompting many Canadian dollar traders to step back. "People are being caught off-guard, there are not a lot of really big flows going through that I'm hearing of," said David Bradley, director of foreign exchange trading at Scotiabank. Helping the loonie, as Canada's currency is colloquially known, the discount on the price of oil sourced from Canada's oil sands compared to the U.S. benchmark crude slipped under $20 for the first time since October, after hitting a $44 divide in January. But offsetting that, yields for longer-dated U.S. government debt have jumped versus their Canadian counterparts so far in March. The Canadian dollar ended the day at C$1.0261 to the greenback, or 97.46 U.S. cents, compared with C$1.0264, or 97.43 U.S. cents, at Monday's North American close. It has strengthened by three-quarters of a cent in the last four sessions after a sharp weakening in recent weeks, helped by outsized jobs growth data for February. "Canada seems well positioned here between the C$1.0230 and C$1.03 area," said Don Mikolich, executive director for foreign exchange sales at CIBC World Markets. "We need to have some reaffirmation on Canadian data to see Canada trade much stronger." Scotia's Bradley agreed, but suggested the next string of data would likely be weak and put further pressure on the loonie as the Bank of Canada possibly adds more dovish language to its outlook on interest rates. "If it wasn't for the strong employment data we saw on Friday, then we would probably be comfortably trading between C$1.03 and C$1.04," he said. With no major data due in Canada this week, attention turns to numbers due out from the United States, Canada's main trading partner. The Canadian currency performed well against the sinking British pound, at one point hitting its strongest level since June 2010 after dismal British manufacturing data revived fears of another recession and increased bets of more easing by the Bank of England. But it slipped against a broadly rallying Australian dollar , hitting its weakest level since March of last year. The price of Canadian government debt was higher across the curve, with the two-year bond up 3 Canadian cents to yield 0.966 percent, while the benchmark 10-year bond rose 29 Canadian cents to yield 1.912 percent. CIBC's Mikolich suggested that the weaker Canadian currency was likely providing some relief to the country's exporters. "Not to say that it's an intentional level, but I think it's something that definitely can be beneficial for the economy, so there's probably not a big rush to do anything that would push us back below par too quickly."
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