August 13, 2009 / 2:12 PM / in 11 years

CANADA FX DEBT-C$ rises on soft U.S. data, bond prices ease

 * C$ rises to 92.17 U.S. cents, underperforms other majors
 * Bond prices dip as stocks gain
 * European data and U.S. data contrast
 TORONTO, Aug 13 (Reuters) - Canada's currency edged higher
on Thursday against a greenback that was pressured by
disappointing U.S. economic data.
 U.S. retail sales dipped an unexpected 0.1 percent in July.
[ID:nN12109251] Data also showed the weak U.S. labor market
struggled to stabilize with the latest jobless claims rising
slightly last week. [ID:nN13489469]
 Also, the euro zone's two biggest economies, Germany and
France, defied expectations with returns to growth in the
second quarter, which helped drag the U.S. dollar lower
[ID:nLD331672] [ID:nN13229983]  despite the U.S. Federal
Reserve's statement on Wednesday that the worst of the
financial crisis is over. [ID:nN1272730]
 While soft U.S. economic news has tended to drive
safe-haven flows to the U.S. dollar during the financial
crisis, it did the opposite on Thursday.
 "The traditional safe-haven story isn't playing out right
now," said Eric Lascelles, chief economics and rates strategist
at TD Securities.
 "The U.S. dollar seems to be softening on sour economic
news as opposed to strengthening on safe-haven flows. That
seems to be why the vast majority of currencies out there are
substantially up."
 The Canadian dollar was one of the softest performers among
major currencies. Its 0.4 percent gain versus the U.S. dollar
on Thursday paled in comparison to the more than 1 percent rise
in its sister commodity currencies, the Australian and New
Zealand dollars.
 A strong open to North American equity markets and a firm
oil price also supported the Canadian dollar.
 At 9:30 a.m. (1330 GMT), the Canadian dollar was at
C$1.0850 to the U.S. dollar, or 92.17 U.S. cents, up from
C$1.0884 to the U.S. dollar, or 91.88 U.S. cents, at the close
on Wednesday, when it snapped a four-day skid.
 A positive tone to equities as well as the surprising
growth data overseas contributed to slightly lower Canadian
bond prices across the curve.
 The disappointing U.S. data offset some of the decline.
 The two-year Canadian bond was off 1 Canadian cent at
C$99.34 to yield 1.328 percent, while the 10-year bond slipped
15 Canadian cents to C$101.75 to yield 3.536 percent.
 The 30-year bond eased 10 Canadian cents to C$116.60 to
yield 4.004. In the United States, the 30-year bond yielded
4.518 percent.
 (Reporting by Ka Yan Ng; editing by Peter Galloway)

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