January 12, 2010 / 2:18 PM / 11 years ago

CANADA FX DEBT-C$ falters after surprise trade deficit

 * C$ falls as low as C$1.0404, or 96.12 U.S. cents
 * Bond prices higher across curve
 By Jennifer Kwan
 TORONTO, Jan 12 (Reuters) - The Canadian dollar fell
against the U.S. currency on Tuesday after the country's trade
balance unexpectedly slipped back into deficit in November.
 The unit dropped to a session low of C$1.0404 to the U.S.
dollar, or 96.12 U.S. cents, from about C$1.0354, or 96.58 U.S.
cents just before the report's release.
 The data showed the trade deficit totaled C$344 million as
exports grew 1.1 percent from the previous month to C$31.58
billion and imports jumped 3.9 percent to C$31.93 billion,
Statistics Canada said on Tuesday.
 The median forecast of analysts in a Reuters poll was for a
surplus of C$600 million. [ID:nN12188141]
 "Canadian data in terms of our trade data was somewhat
weaker than expected and so that threw in some concern in terms
of the strength of the Canadian dollar really weighing on the
export sector and what that means for growth going forward,"
said Camilla Sutton, currency strategist at Scotia Capital.
 That disappointing reading outweighed data that showed new
home prices rose 0.4 percent in November for the fifth
consecutive monthly gain, adding to growing evidence that the
housing market is leading Canada's economic recovery.
 At 8:59 a.m. (1359 GMT), the Canadian dollar was at
C$1.0400 to the U.S. dollar, or 96.15 U.S. cents, down from
Monday's finish at C$1.0335 to the U.S. dollar, or 96.76 U.S.
 Sutton said the Canadian dollar had been weaker leading
into the report, weighed down by a firmer U.S. dollar and as
commodity linked currencies were knocked down after China said
it would tighten banks' reserve requirements. [FRX/]
 "It's looking like China is entering into a much tighter
monetary policy environment," said Sutton.
 Canadian bond prices were higher, mirroring gains in U.S.
Treasuries, which rose as stocks looked set to open lower.
 (Editing by Jeffrey Hodgson)

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