CANADA FX DEBT-C$ hits 2-1/2 month high, but US$ parity seen iffy

Wed May 8, 2013 4:50pm EDT
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* C$ at C$1.0033 vs US$, or 99.67 U.S. cents
    * Survey sees 15,000 new Canadian jobs
    * Bond prices rise across curve
    * Poll sees C$ weakening against US$ in year ahead

    By Alastair Sharp
    TORONTO, May 8 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart for a fourth straight session on
Wednesday, testing but failing to push past equal value with the
greenback ahead of Friday's domestic employment report.
    The currency received a boost as prices for most commodities
rose on strong Chinese trade data and on signs that Germany may
escape a sharp slowdown. 
    "You can't help but be impressed by the strength in the
Canadian dollar," said Adam Button, a currency analyst at
ForexLive in Montreal.
    The currency has gained some 2-1/2 cents on the U.S. dollar
since late April. It closed the North American session on
Wednesday at C$1.0033, or 99.67 U.S. cents, compared with
C$1.0044, or 99.56 U.S. cents, on Tuesday.
    The currency at one point hit C$1.0017 to the greenback, its
strongest level since Feb. 15.
    But the rise of the loonie, as Canada's currency is
colloquially known, could yet falter, strategists say.
    The gain has been tied to the steep rise in global equity
markets and signals from central banks that they will keep on
setting policy to support growth.
    "On the slightest bit of bad news, the Canadian dollar is
vulnerable," Button said. "Every day it takes better and better
news to maintain this momentum."
    Over the longer term, the Canadian dollar is expected to
weaken against the greenback in the year ahead, according to a
Reuters poll published on Wednesday. Forecasters cited concern
about the economy's slow rate of growth compared with that of
the United States. 
    With the April Canadian employment report due out on Friday,
Button said he did not expect the loonie to push past equal
value with the greenback this week, and said it could even pull
back as much as C$1.0130.
    The currency had little reaction to Canadian data that
showed housing starts slipped in April from March. The number of
starts was in line with the median forecast of analysts polled
by Reuters. 
    "It's a generally quiet week until Friday. I think Friday,
there's some scope for some volatility in the FX space. But
until then, it's probably going to be range-bound," said Mazen
Issa, macro strategist at TD Securities.
    Friday's employment report is expected to show the Canadian
economy added 15,000 jobs in April after a steep decline notched
in March, according to a Reuters survey of analysts.
    Prices for Canadian government bonds were generally higher
across the curve, although rises were limited at the short end.
    The two-year bond rose a third of a Canadian cent
to yield 0.978 percent, while the benchmark 10-year bond
 gained 11 Canadian cents to yield 1.812 percent.
    Canada's dollar underperformed against the euro 
and was flat versus the yen, while it traded at its
strongest level against the New Zealand dollar since
    New Zealand's central bank confirmed on Wednesday it was
selling its own currency, reflecting concerns that a flood of
global money could undermine a budding economic recovery.