February 12, 2009 / 2:50 PM / 11 years ago

CANADA FX DEBT-C$ slips lower as momentum dries up

* C$ slips after Wednesday’s late-session rally

* Canada’s economic data calendar empty until next week

* Bonds pare early gains after strong U.S. retail data

By Frank Pingue

TORONTO, Feb 12 (Reuters) - The Canadian dollar was a touch lower versus the U.S. currency on Thursday morning as a lack of any Canadian data to inspire a move persuaded the market to let the currency drift after Wednesday’s late-session rally.

There is no Canadian economic data due for the remainder of the week, which likely means moves in the Canadian dollar will be dictated by the performance of the greenback.

The Canadian dollar made late-session gains on Wednesday, spurred by the U.S. congressional deal on an economic stimulus package, which raised the market’s risk appetite and reversed the losses the currency suffered earlier in the day when Canada posted its first monthly trade deficit in almost 33 years.

“There’s just no sort of momentum at this stage and I think a lot of people took their bets and positioning after the trade numbers,” said Michael Gregory, senior economist at BMO Capital Markets.

“Plus there’s nothing on the Canadian economic front for the rest of this week, so I think people just decided to punt around a few other currencies and maybe re-look at the Canadian dollar next week.”

At 9:25 a.m. (1425 GMT), the Canadian dollar was at C$1.2457 to the U.S. dollar, or 80.28 U.S. cents, down from C$1.2428 to the U.S. dollar, or 80.46 U.S. cents, at Wednesday’s close.

Oil prices were lower, also keeping the Canadian dollar down, but currency experts have said the link between the currency and oil prices has diminished. Canada is a key exporter of oil and for years its currency has been directed by prices for the commodity.

Still, the Canadian dollar has proved resilient in the face of a recent string of weak domestic data, notably Wednesday’s report that showed a trade deficit of C$460 million in December and figures last week that showed Canada had its worst monthly job losses in more than three decades in January.


Canadian bonds were higher, but took their cue from the bigger U.S. Treasury market and pared early gains after a report showed sales at retailers in the United States unexpectedly rebounded in January.

Prices were sustained, however, by nagging concerns that U.S. government efforts to help revive the ailing economy and stabilize banks may not be enough.

“In the backdrop, a good consumer figure for the first time in a while it could be that that may stoke a little bit of risk appetite,” said Michael Gregory, senior economist at BMO Capital Markets. “So I wouldn’t be surprised at all if we end the day with bond prices down slightly.”

The interest-rate sensitive two-year bond was up 1 Canadian cent at C$102.81 to yield 1.158 percent, while the 10-year bond rose 25 Canadian cents to C$110.80 to yield 2.914 percent.

The 30-year bond was up 40 Canadian cents at C$123.30 to yield 3.669 percent. (Editing by Peter Galloway)

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