September 23, 2010 / 8:54 PM / in 10 years

CANADA FX DEBT-C$ slips for second day, bonds gain

   * C$ finishes lower at 97.11 U.S. cents
 * Bonds hold gains after mixed data, softening stocks
 (Adds details)
 TORONTO, Sept 23 (Reuters) - The Canadian dollar finished
lower against the U.S. dollar on Thursday, while bonds were
firmer, as mixed global economic data suggested a slow
recovery, dampening interest in riskier assets.
 Stocks markets faltered and the price of oil was flat as
market players digested data showing Ireland's economy shrank
in the second quarter, while U.S. jobless claims in the latest
weekly report rose unexpectedly, suggesting continued labor
market softness. [MKTS/GLOB]
 The currency cut its losses, however, on a report that
showed U.S. home resales climbed from a 13-year low in August
after a sharp summer slowdown. [ID:nN23130114]
 "Oil is very close to where it closed yesterday and we have
equity markets that...are a bit weaker. Generally we're seeing
on the day the U.S. dollar is somewhat stronger," said Camilla
Sutton, chief currency strategist at Scotia Capital.
 Canada's currency CAD=D3 finished lower for a second
straight session. It closed at C$1.0340 to the U.S. dollar, or
96.71 U.S. cents, down from Wednesday's close of C$1.0298 to
the U.S. dollar, or 97.11 U.S. cents.
 It recovered from a two-week low of C$1.0380 to the U.S.
dollar, or 96.34 U.S. cents, hit after U.S. initial claims for
state unemployment benefits increased 12,000 to a seasonally
adjusted 465,000, breaking two straight weeks of declines. For
details, please see [ID:nN23129887]
 Still, the currency has been largely stuck in a range for
the last week or so, said Shaun Osborne, chief FX strategist at
TD Securities.
 "We generally think the C$1.02-C$1.03 should hold. It's
been our view for quite some time that this is really the base
of the market at the moment," he said. "The bargain-hunting
from the corporate sector continues to be a strong motivator it
seems of this support (for the U.S. dollar) around the C$1.02
 "But with the door being flung open to some more
(quantitative easing by the Federal Reserve) in the U.S. we
have to realize that the (U.S. dollar) upside might not be as
extensive as previously. We were looking for C$1.10-C$1.12
towards the end of the year. We're lowering our sights for
dollar/Canada in the short-term point of view."
 A test of C$1.04 could be in the cards, Osborne added.
 Earlier this week, the U.S. Federal Reserve signaled it was
ready to inject more money into the U.S. economy to shore up
the recovery and avert a damaging downward spiral in prices.
 Canadian government bonds were higher across the curve,
alongside their U.S. counterparts.
 Weaker stock markets contributed to more interest in the
relative safety of government debt, and Canadian government
bonds outperformed U.S. bonds across most of the curve, except
in the two-year issue. 
 The two-year government of Canada bond edged up 1 Canadian
cent to yield 1.415 percent, while the 10-year bond gained 30
Canadian cents to yield 2.833 percent.
 The Bank of Canada announced on Thursday it will hold eight
bond auctions, including 1 real return issue, in the October to
December quarter of 2010. [ID:nTOR007820]
 In corporate debt news, Enbridge Inc sold C$300 million of
medium-term notes in two parts. [ID:nN23162189] [ISU-CAN]
 (Reporting by Ka Yan Ng; editing by Peter Galloway)

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