CANADA FX DEBT-C$ firms to 1-month high on U.S. data; CPI eyed
* C$ at C$1.0164 vs US$, or 98.39 U.S. cents * U.S. single-family home prices rise in January * Demand for U.S. durable goods surges 5.7 percent * Canadian bond prices fall across curve By Solarina Ho TORONTO, March 26 (Reuters) - The Canadian dollar rallied nearly half a cent to a one-month high against the greenback on Tuesday, helped by a better-than-expected rise in U.S. durable goods orders in February and U.S. housing data that showed recovery remained on track. The loonie, as it is colloquially known, strengthened notably after data showed that U.S. single-family home prices rose in January, the biggest annual increase in six-and-a-half years, according to the closely watched S&P/Case Shiller composite index. This was just the latest indicator the U.S. housing market recovery remains on track. Demand for long-lasting U.S. manufactured goods, which range from toasters to aircraft, surged 5.7 percent in February and reversed January's 3.8 percent plunge. This suggested factory activity continued to expand at a moderate pace. A stronger U.S. economy often benefits the Canadian dollar, because it is the largest single market for Canadian exports. "The headline of durable goods orders is also somewhat constructive for risk sentiment and maybe by association has helped to provide the Canadian dollar with a little bit more ... positive momentum," said David Tulk, chief Canada macro strategist at TD Securities. The Canadian dollar finished its North American trading session at C$1.0164 against the U.S. dollar, or 98.39 U.S. cents, stronger than Monday's North American close at C$1.0212, or 97.92 U.S. cents. Earlier in the session, it touched C$1.0161, or 98.41 U.S. cents, the currency's strongest level since Feb. 22. The Canadian dollar was outperforming all major currencies and was touching it's strongest level against the euro in two and a half months. Concerns over Cyprus and the region's debt woes continued to pressure the euro, which also hovered near four-month lows against the U.S. dollar. Still, a string of soft economic data pressured Canada's dollar over the last month and some analysts saw the move on Tuesday as a temporary rebound before it weakens further. "We're of the opinion this is just a correction within the context of a broader sequence of market developments to come," said Gareth Sylvester, director at Klarity FX in San Francisco, noting there is good U.S. dollar support around the C$1.0135 level, but that the Canadian dollar is biased to weaken further. "We're really looking at that level to hold and then act as a platform for another assault up to the (U.S. dollar) highs we saw in February." Inflation data expected on Wednesday will be the next closely watched domestic data. This will be followed by January gross domestic product figures on Thursday, which are expected to be weak. Canadian government bond prices were lower across the curve, with the two-year bond off 1.8 Canadian cents to yield 1.008 percent. The benchmark 10-year bond fell 10 Canadian cents to yield 1.814 percent.
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