CANADA FX DEBT-C$ pulls back from one-month high as data weighs
* Canadian dollar at C$1.0894 or 91.79 U.S. cents * Bond prices lower across the maturity curve (Adds details on market activity, quotes, updates prices) By Leah Schnurr TORONTO, May 7 (Reuters) - The Canadian dollar weakened modestly against the greenback on Wednesday, easing from the previous session's nearly one-month high as data showed Canadian building permits fell unexpectedly in March. The market had little reaction to comments from U.S. Federal Reserve Chair Janet Yellen as they offered few surprises. Yellen said the U.S. economy was still in need of lots of support given the considerable slack in the labor market. The Canadian dollar took a breather after Tuesday's selloff of the U.S. dollar helped push the loonie strongly higher and out of its recent trading range. The currency had been comfortable around either side of the key C$1.10 level in recent weeks, but Tuesday's action pushed it into the high C$1.08s. "We've more narrowly defined ourselves a bit lower right now," said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto. The U.S. dollar-Canadian dollar pairing could see support at the C$1.0860 and C$1.0840 levels, Mikolich said, while the top could be limited at C$1.0960. The loonie weakened after data showed the value of building permits issued in Canada fell 3 percent in March, though residential permits inched higher. The report could temper expectations for housing starts data due on Thursday, though it can often take two or three months for the impact of building permits to be seen in the starts figures, Mikolich said. The Canadian dollar ended the North American session at C$1.0894 to the greenback, or 91.79 U.S. cents, weaker than Tuesday's close of C$1.0879, or 91.92 U.S. cents. In the short term, the risk is that the loonie will weaken as U.S. dollars should attract buyers at these levels, said Dean Popplewell, chief currency strategist at OANDA in Toronto. "From a Canadian perspective, straddling this C$1.09 level, there's still a good appetite to own U.S. dollars," Popplewell said. "Obviously the market has taken somewhat of a breather after the last couple days. For the Canadian dollar to gather momentum from these levels would be relatively premature." Canadian government bond prices were lower across the maturity curve, with the two-year off half a Canadian cent to yield 1.074 percent, and the benchmark 10-year down 7 Canadian cents to yield 2.382 percent. (Editing by Peter Galloway)
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