CANADA FX DEBT-C$ strengthens while eyeing Fed, domestic data

Thu Mar 13, 2014 4:51pm EDT
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* C$ at C$1.1053 vs US$, or 90.47 U.S. cents
    * Bond prices higher across the maturity curve
    * Market players await Fed, domestic data catalysts

    By Solarina Ho and Alastair Sharp
    TORONTO, March 13 (Reuters) - The Canadian dollar
strengthened against the greenback on Thursday, but was seen
trapped in a tight range until domestic data or the U.S. Federal
Reserve gives it reason to move more drastically next week.
    The Canadian currency is likely hemmed into a
C$1.1050-C$1.1120 range at least until the U.S. Federal Reserve
central bank meets next week, according to Darren Richardson,
manager of corporate dealing for North America at CanadianForex.
    "There is a good chance that the market doesn't get exactly
what they expected" from the Fed, he said.
    It will be the Fed's first policy-setting meeting with Janet
Yellen as chair, and will likely aim to finesse a rewriting of
the bank's promise to keep U.S. interest rates low without
roiling financial markets. 
    A dearth of meaningful domestic data has left the loonie, as
Canada's currency is colloquially known, looking outside its
borders and to technical analysis for motivation recently.
    Inflation and retail sales data for Canada due next week
could also move the currency, strategists said.
    Brent crude oil prices were lower as weak economic data in
China offset fears that a dispute over Ukraine between Russia
and Western powers could escalate and disrupt supplies. 
    China worries also haunted copper prices after a brief
recovery, with the health of the world's second largest economy
in question. 
    "We strengthened in the overnight, but we seem to be
treading water a little bit here," said David Tulk, chief Canada
macro strategist at TD Securities.
    "We're going to have to wait until we get some Canadian data
to really determine sentiment one way or another," he said.
    With little domestic data to drive direction, the Canadian
dollar and its Australian and New Zealand counterparts had been
under pressure earlier this week as commodity prices softened.
    Moves in the Canadian dollar are often driven by sentiment
over commodities, as much of the country's oil, mineral and food
production are exported.
    The Canadian dollar ended the session changing
hands at C$1.1053 per U.S. dollar, or 90.47 U.S. cents, stronger
than Wednesday's close of C$1.1116 or 89.96 U.S. cents.
    The Canadian dollar briefly pared gains after U.S. data
showed retail sales rebounded in February, while new
applications for U.S. unemployment benefits touched a
three-month low last week. 
    The New Zealand dollar was bolstered by a rise in central
bank rates and hints of more to come, while
stronger-than-expected jobs data lifted the Aussie. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year bond up 2 Canadian
cents to yield 1.010 percent and the benchmark 10-year
 up 62 Canadian cents to yield 2.387 percent.