CANADA FX DEBT-C$ takes a breather from week's rally
* Canadian dollar at C$1.1060 or 90.42 U.S. cents * Bond prices mostly higher across maturity curve By Leah Schnurr TORONTO, March 28 (Reuters) - The Canadian dollar softened against the greenback on Friday, taking a breather after this week's strong recovery from the multi-year lows it hit last week, while a lack of domestic economic data provided few catalysts for trade. The loonie fell to a 4-1/2-year low last week, pressured by the Bank of Canada saying it could not rule out an interest rate cut and by a potentially faster timetable for raising rates in the United States. But the currency was able to recoup all those losses this week and some analysts believe the selloff was likely overdone, with Friday's moves a predictable retracement after the rally. "The lack of follow through (is) telling us those positions were a little bit ahead of themselves," said Brad Schruder, director of foreign exchange at BMO Capital Markets. "We're now slowly easing back to let's call it a fair value for USD/CAD, which is probably somewhere around C$1.0950 an C$1.1150." The Canadian dollar, which was underperforming most of its currency counterparts, finished Friday's session at C$1.1060 to the greenback, or 90.42 U.S. cents. This was weaker than Thursday's close of C$1.1032, or 90.65 U.S. cents. Earlier, the currency rose to touch a three-week high of C$1.1001. For the week, the U.S. dollar has depreciated about 1.4 percent against the loonie. After this week's recovery in the loonie, the U.S. dollar-Canadian dollar pairing was starting to look cheap, said Shaun Osborne, chief currency strategist at TD Securities in Toronto. "I'm not sure we're going to go that much lower for now, this is a pretty decent correction in the overall scheme of things," he said. Investors will return next week to a busier calendar of economic data with monthly domestic gross domestic product figures on tap on Monday. Through the week, markets will also take in other reports, culminating in the monthly employment data from Canada and the United States next Friday. "I think it would be fair to say everybody can discount any 'weather effects' - so we'll start to see some normalization, or at least a lack of excuses around why the data is the way it is," said Schruder. "The Canadian economy isn't as bad as these global Canadian dollar bears would have you believe." Schruder expects the loonie to trade between C$1.0925 and C$1.1175 next week, ahead of job figures, barring any surprises. Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 2 Canadian cents to yield 1.076 percent. The benchmark 10-year bond slipped 7 Canadian cents to yield 2.443 percent. (Additional reporting by Solarina Ho; Editing by Peter Galloway and James Dalgleish)
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