CANADA FX DEBT-C$ firms as investors take a breath after slide
* Canadian dollar at C$1.1081 or 90.24 U.S. cents * Bond prices lower across the maturity curve By Leah Schnurr TORONTO, Feb 4 (Reuters) - The Canadian dollar firmed against the greenback on Tuesday, boosted by some profit-taking as investors tried to gauge the path of economic growth on both sides of the border. Analysts expect the recent respite from loonie selling to be temporary, however, and see the currency resuming its downward path. The Canadian dollar has come under intense pressure in the last few months, with selling intensifying in January as the Bank of Canada left the door open to an interest rate cut and as investors turned increasingly negative toward the currency. Expectations that the U.S. economy will outperform Canada's this year have also weighed on the loonie coming into 2014, but recent softer U.S. data has helped temper that. U.S. manufacturing data on Monday showed activity slowed sharply in January. The view that the performance gap between the two countries could be more narrow that some had anticipated gave the loonie some support on Tuesday, said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. "If the end game is about who is going to tighten rates first and when, I think any slowdown States-side certainly doesn't accelerate the timing of any rate hikes in the U.S. relative to Canada. They may well be timed around the same period," Mikolich said. "If we're just keeping pace with each other, which is what the data lately has been suggesting, I think we might see a little bit of a pause before any further Canadian dollar weakness." The Canadian dollar was at C$1.1081 to the greenback, or 90.24 U.S. cents, stronger than Monday's close of C$1.1097, or 90.11 U.S. cents. The Canadian dollar touched fresh 4-1/2-year lows last week but has built some momentum since then as investors consolidate positions. Data on Friday showed investors had pared back their Canadian dollar short positions in the week ended Jan. 28. "We see the Canadian dollar now consolidating just below C$1.11 and I think it does open up a bit of room to test back down to that C$1.0950 area, where we've seen the previous bottom," Mikolich said. "Most likely this is a short-term trend here. I don't think we've lost our central bank's bias toward a weaker currency." The Canadian economic calendar is light until Thursday when investors will get data on the trade balance for December. The closely watched unemployment report is set for Friday, with hiring forecast to have picked up in January after the Canadian economy unexpectedly shed jobs at the end of the year. Canadian government bond prices were lower across the maturity curve, with the two-year off 4-1/2 Canadian cents to yield 0.954 percent and the benchmark 10-year down 30 Canadian cents to yield 2.333 percent.
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