February 22, 2010 / 9:45 PM / 10 years ago

CANADA FX DEBT-Canada dollar dips with commodities mixed

 * C$ slightly lower at 95.91 U.S. cents
 * Bonds mixed across the curve
 (Updates to close, adds details, quotes)
 By Claire Sibonney
 TORONTO, Feb 22 (Reuters) -  The Canadian dollar weakened
on Monday after rising to a one-month high early in the session
but a lack of economic data and mixed commodity markets kept
the currency close to the unchanged mark.
 The price of oil, which often influences the
commodity-linked currency, rose slightly to over $80 a barrel,
but gold edged lower as risk appetite eased and the dollar hit
a session high against the euro amid renewed worries about
Greek debt. [O/R] [GOL/]
 With no major Canadian or U.S. economic data releases for
the day, trading in the Canadian dollar was light.
 "The Canadian dollar was modestly softer today but only
marginally," said Millan Mulraine, an economics strategist at
TD Securities.
 "It's a reflection of a broader behavior of currencies
across the globe with investors more or less sitting on their
hands right now waiting for the next piece of economic news."
 Mulraine said markets will listen closely to U.S. Federal
Reserve Chairman Ben Bernanke's semiannual congressional
testimony for more clues on monetary policy as well as a slew
of U.S. housing data later in the week.
 "That will certainly provide a fairly good gauge of not
only the state of the U.S. housing market but it will also be a
good reflection of the health of U.S. consumer household
balance sheets and the economy as a whole," he said.
 The Canadian dollar closed at C$1.0426 or 95.91 U.S. cents,
down from  Friday's close at C$1.0405 or 96.11 U.S. cents.
Earlier the Canadian currency strengthened to C$1.0371 or 96.42
U.S. cents, its highest since Jan. 20.
 Canadian government bonds were mixed across the curve, as
fixed-income markets continued to digest last week's news about
the Fed raising its discount lending rate and tame U.S.
 The two-year Canadian government bond CA2YT=RR added 4
Canadian cents at C$100.245 to yield 1.376 percent, while the
10-year bond CA10YT=RR fell 8 Canadian cents to C$101.910 to
yield 3.507 percent.
 "I think it's a continuation of what we saw on Friday when
we had really benign inflation report out of the U.S. which
would suggest that the Fed will continue to have considerable
room for keeping rates accommodative and in some ways I think
investors are continuing to be buoyed by that at the short
end," said Mulraine.
 "The longer the Fed stays on hold the more inflation
pressures will build up in the longer end," said Mulraine.
 Longer-dated U.S. Treasuries also fell on Monday as
relatively soft demand in an auction of 30-year
inflation-protected bonds added to uncertainty over the
market's ability to absorb record new issuance this week.
 In new issue news, the Bank of Canada said on Monday it
would auction C$2.5 billion of 8-day treasury bills on Feb. 24.
  (Reporting by Claire Sibonney; Editing by Frank McGurty)

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