CANADA FX DEBT-C$ softer vs US$, hits 4-1/2-year high vs yen on BoJ stimulus

Mon Apr 8, 2013 10:04am EDT
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* C$ at C$1.0195 vs US$, or 98.09 U.S. cents
    * Yen at 4 1/2 year lows vs C$
    * C$ at weakest level vs NZD since mid-2005
    * C$ seen trading between C$1.0160 and C$1.0240 on Monday

    By Solarina Ho
    TORONTO, April 8 (Reuters) - The Canadian dollar was weaker
against the greenback on Monday, but was still stronger than
levels hit after Friday's grim employment data, as the yen slid
to four-and-a-half-year lows against Canada's dollar following
the Bank of Japan's aggressive stimulus policy. 
    The loonie, as the currency is colloquially known, has
strengthened as much as 6 percent against the yen since
Thursday, when the Bank of Japan unleashed the world's most
intense burst of monetary stimulus, promising to inject about
$1.4 trillion into the economy in less than two years, a radical
gamble that sent the Japanese currency tumbling. 
    The yen plunged to near four-year lows against the dollar
and three-year lows against the euro on Monday.
    "When you look at the movement of the Canadian dollar,
Friday obviously, all the short-term guys bought dollars after
the weak Canadian data. They were all squeezed out late in the
day ... the flight of the yen capital is finding its way to
Canada as well," said Darcy Browne, Managing Director, Capital
Markets Trading at CIBC.
    "There's a slight dislocation in the currency markets
created by the yen crosses right now. Look for that to correct
and we'll probably see a higher dollar overall versus Canada in
the near term."
    At 9:34 a.m. (1434 GMT), the Canadian dollar was
trading at C$1.0195 versus the U.S. dollar, or 98.09 U.S. cents,
higher than Friday's North American close at $1.0164, or 98.39
U.S. cents.
    Except for the yen, the Canadian dollar was weaker against
all other major currencies. At one point, it touched its weakest
level against the New Zealand dollar since mid-2005.
    On Friday, disappointing employment data in Canada and the
United States sent markets tumbling on concerns the economic
recovery may be flagging.  
    Canada's economy shed 54,500 jobs in March, more than wiping
out the previous month's big gain and pushing up the jobless
rate to 7.2 percent from 7.0 percent. Market analysts had
forecast an increase of 8,500 jobs. 
    The news had sent the currency falling more than a cent from
Thursday's close to as low as C$1.0236, or 97.69 U.S. cents on
    Canadian housing data this Tuesday and Thursday will be the
next potential domestic currency drivers.
    "If the job landscape doesn't look particularly good and we
see some weakness in the housing sector, than I think the market
will be more apt to sell Canadian dollar even further," said
Browne, who expects the currency to trade between C$1.0160 and
C$1.0240 on Monday.
    The price of Canadian government debt was mixed, with the
two-year bond down 1.5 Canadian cents to yield 0.987
percent while the benchmark 10-year bond rose 6
Canadian cents to yield 1.745 percent.