December 9, 2010 / 9:50 PM / 10 years ago

CANADA FX DEBT-C$ ends flat, new supply floods bond market

   * C$ little changed at 98.96 U.S. cents
 * Bonds edge up but gains capped by new supply
 (Adds details)
 TORONTO, Dec 9 (Reuters) - The Canadian dollar edged a
touch higher against the U.S. currency in a restrained trading
range on Thursday.
 The Canadian currency CAD=D4 moved in a narrow band of
about 60 ticks and finished the North American session at
C$1.0105 to the U.S. dollar, or 98.96 U.S. cents, little
changed from Wednesday's close of C$1.0108 to the U.S. dollar,
or 98.93 U.S. cents.
 "There seems to be a distinct lack of news and a rather
apathetic outlook from the market," said John Curran, senior
vice president at CanadianForex. "Realistically the market
seems to be reacting more to negative news than it does to
positive news."
 During the day, the currency briefly firmed to a session
high at C$1.0066 to the U.S. dollar, or 99.34 U.S. cents, after
recovery hopes perked up on a U.S. labor report that showed new
claims for unemployment benefits were lower than expected last
week. [ID:nN09222654]
 There was little reaction to Canadian data that showed new
home prices edged higher by 0.1 percent in October from
September, the third consecutive gain. [ID:nN0979036]
 The Bank of Canada's Financial System Review, which
concluded overall risks to the domestic financial system have
risen over the past six months, also yielded very little
movement in the Canadian dollar. [ID:nN09234033]
 Canadian bond prices edged higher on Thursday but gains
were capped by new supply.
 In new issues, the Province of Quebec sold C$500 million in
a reopening of an existing 5.00 percent issue, according to a
term sheet seen by Reuters. [ID:nN09221336][ISU-CAN]
 "A lot of new issue supply may have just weighed on the
market a bit," said Sheldon Dong, fixed income analyst at TD
Waterhouse Private Investment. He said a separate multi-tranche
offering of about C$1.4 billion was also on deck to be priced
on Thursday.
 The two-year bond CA2YT=RR was up 4 Canadian cents to
yield 1.669 percent, while the 10-year bond CA10YT=RR was
unchanged to yield 3.259 percent.
 Canadian government bonds had a mixed performance against
their U.S. counterparts. The two-year maturity outperformed its
U.S. counterpart, and was 103 basis points above its U.S.
counterpart, compared with about 106 basis points in the
previous session.
 The 30-year issue underperformed, as a U.S. 30-year bond
auction drew solid demand.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)

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