* European PMI, China industrial data set tone
* Bonds prices largely flat
By Jennifer Kwan
TORONTO, Feb 22 (Reuters) - The Canadian dollar retreated against its U.S counterpart on Wednesday as weak euro zone and China data sapped investor appetite for riskier assets.
European February PMIs came in weaker than expected and a preliminary survey of China’s industrial activity showed the overall manufacturing sector contracting for a fourth-straight month. Both sets of data helped to push down global equity markets. [ID:
Growing worries that Greece will struggle to meet the demands of its new bailout deal added to the uncertain tone for shares and the euro, while the prospect of weaker demand in both Europe and Asia sent oil and metals markets lower.
“Markets have a general cautious tone to them,” said David Watt, senior currency strategist at RBC Capital Markets.
“The foreign exchange market theme has been largely one where you see some domestic stories playing out, and we haven’t seen much of a domestic story for Canada with the recent data.”
At around 8:30 a.m. (1330 GMT), the Canadian dollar was at C$0.9999 versus the U.S. dollar, or $1.0001, slightly off the currency’s finish at C$0.9966 versus the U.S. dollar, or $1.0034, on Tuesday.
Watt said he expects the currency to tread within a range of around C$0.9950 and C$0.9985 versus the greenback. He said a key technical level to watch is the 200-day moving average around C$0.9985 and a decisive move above or below could set the longer-term trend.
“If you’re below the 200-day moving average medium term sentiment is Canadian dollar positive. If you’re above the 200-day moving average medium term sentiment is generally U.S. dollar positive,” said Watt.
“When you’re waffling around it basically indicates the market is unclear.”
Canadian bond prices were largely flat with the two-year bond up 1 Canadian cent to yield 1.110 percent. The 10-year bond sagged 2 Canadian cents to yield 2.558 percent.