February 17, 2010 / 2:48 PM / 10 years ago

CANADA FX DEBT-C$ softens, as U.S. data, flat commodities weigh

 * C$ slightly down at 95.71 U.S. cents
 * Greenback firm after U.S. housing data
 * Bonds lower across the curve
 By Claire Sibonney
 TORONTO, Feb 17 (Reuters) - The Canadian dollar fell
slightly against its U.S. counterpart on Wednesday, as the
greenback received a boost from U.S. housing data and flat
prices for gold and other base metals offered little support.
 The U.S. dollar also rose against the Japanese yen and
euro, helped by a report that showed U.S. housing starts
rebounded more strongly than expected in January.
 The price of oil, which often influences the direction of
Canada's dollar, rose towards $78 a barrel. But gold and other
base metals such as aluminum, nickel and zinc were fairly flat,
curbing risk appetite for the commodity-linked currency. [O/R]
 "The message from the commodity markets is there is no real
strong follow-through of yesterday's significant gains ...
providing no clear direction for dollar/CAD," said Matthew
Strauss, senior currency strategist at RBC Capital Markets.
 Strauss said the currency's reaction to a 0.7 percent
increase in Canada's December wholesale trade figures was
subdued as the headline was only slightly better than
expectations. [ID:nSCLHDE60Y]
 Looking ahead to the rest of the day's events, the currency
market will be paying close attention to the FOMC minutes from
Jan. 26-27 meeting due at 2 p.m. ET (1900 GMT), looking for
hints of a Fed exit strategy. [ID:nN16236616]
 "The market will be focusing on any detailed discussions
regarding language (about) interest rates remaining low for an
extended period," said Strauss.
 The Canadian dollar would likely see some weakness on the
back of broad-based U.S. dollar strength on any signs that
point a U.S. rate hike sooner rather than later, he added.
 At 9:19 a.m. (1419 GMT) the Canadian dollar was at
C$1.0448, or 95.71 U.S. cents, down from Tuesday's close at
C$1.0435 to the U.S. dollar, or 95.83 U.S. cents. The currency
hit a three-week high on Tuesday.
 With global equities higher, Canadian bond prices were
lower across the curve, following U.S. Treasuries, which fell
as surprisingly strong housing starts data helped to assuage
worries over the sluggish pace of economic recovery. [US/]
 The two-year Canadian government bond CA2YT=RR was down 4
Canadian cents at C$100.325 to yield 1.337 percent, while the
10-year bond CA10YT=RR fell 45 Canadian cents to C$102.000 to
yield 3.495 percent.
 (Editing by Jeffrey Hodgson)

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