CANADA FX DEBT-C$ boosted by soft U.S. data, firms to 4-month high

Wed May 13, 2015 5:01pm EDT
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(Updates with strategist comment, closing figures, details)
    * Canadian dollar at C$1.1967 or 83.56 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 13 (Reuters) - The Canadian dollar firmed
against the U.S. dollar on Wednesday, at one point hitting its
strongest since mid-January, following disappointing U.S.
economic data that pushed the greenback to more than three-month
lows against a basket of major currencies.
    U.S. retail sales missed forecasts in April, holding steady
as households scaled back big-ticket purchases such as cars.
Meanwhile, April import prices in the United States fell for a
10th straight month, likely due to the strong U.S. dollar.
    Market participants were hoping for more upbeat signs of an
improving second quarter in the United States following a soft
first quarter.
    "Combine the soft data, which really hurt the U.S. dollar
and dollar index, and commodities prices, which came off late in
the day ... our view is, Canada probably had a bit more room to
run here," said Don Mikolich, executive director, foreign
exchange sales at CIBC World Markets.
    "The Fed looks very firmly set for September or later now on
the rate hike side. Canadian numbers have been holding in and
oil prices have been supportive."
    The Canadian dollar was trading at C$1.1967 to the
greenback, or 83.56 U.S. cents, stronger than the Bank of
Canada's official close of C$1.2018, or 83.21 U.S. cents.
    The currency had hit C$1.1928 earlier, breaking through a
recent C$1.1940 barrier. It was the loonie's strongest level
since Jan. 15, 2015. Its weakest level for the day was C$1.2028.
    Mikolich, noting there was little standing in the way of a
stronger Canadian dollar in the short term if oil prices can
hold above $60 a barrel and Canadian data remains respectable,
said the loonie could move below C$1.19 in the coming sessions
barring negative domestic news.
    Over the medium to longer term, the currency is still
expected to slide on the prospects of a Fed hike, he added.
    Canadian government bond prices were mixed across the
maturity curve, with the longer-term bonds falling. The two-year
 price was flat, yielding 0.695 percent and the
benchmark 10-year slid 33 Canadian cents to yield
1.835 percent.
    The Canada-U.S. two-year bond spread was 11.5 basis points,
while the 10-year spread was -46.1 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski and James