TORONTO (Reuters) - The Canadian dollar edged modestly higher against the U.S. dollar on Thursday, but North American economic data failed to push the currency out of a recent tight trading range.
“It’s the range we’ve become unfortunately accustomed to. It’s hard to read into a couple of pips one way or another,” said David Tulk, chief Canada macro strategist at TD Securities.
Canadian manufacturing sales rose 0.4 percent in September from August, mainly on a sharp rise in aerospace, but sales fell in the heavyweight auto industry and in most other industries, according to Statistics Canada.
In the United States, new claims for U.S. jobless benefits surged to a 1-1/2 year high last week following devastating superstorm Sandy.
“Jobless claims is going to be skewed by the hurricane, so we can’t read too much into that,” Tulk said. “(There’s) nothing too much on the data front to really alter sentiment from a very weak starting point overnight.”
Tulk said the Canadian data met market expectations, but that he still considered it a bit weaker given the strength was mostly attributed to the volatile aerospace sector.
The Canadian dollar was trading at C$1.0011 versus the U.S. dollar, or 99.89 U.S. cents. This was firmer than Wednesday’s North American finish of C$1.0038, or 99.62 U.S. cents.
The Canadian dollar could retest the C$1.0040 level, according to TD’s daily FX outlook, with support remaining around the C$0.9985 to C$0.9995 area. The currency has been trading within this range for the past week.
The currency’s performance was mixed against a basket of other major currencies, underperforming against the euro, but outperforming against other commodity currencies such as the Australian dollar. <FRX/>
Ongoing nervousness over Europe’s debt crisis and over how the United States will address its fiscal problems have kept investors away from assets, such as the commodity-linked Canadian dollar, considered to be risky.
Prices for Canadian government debt were lower across the curve, with the two-year bond falling 1.5 Canadian cents to yield 1.081 percent, while the benchmark 10-year bond fell 13 Canadian cents to yield 1.715 percent.
Reporting by Solarina Ho; Editing by Peter Galloway