CANADA FX DEBT-C$ ends firmer ahead of U.S. data; bonds rise

Thu Sep 1, 2011 4:35pm EDT

* C$ at C$0.9755 vs US$, or $1.0251

* Investors await U.S. nonfarm payrolls on Friday

* Bonds push higher across curve (Updates to close, adds commentary)

By Andrea Hopkins

TORONTO, Sept 1 (Reuters) - The Canadian dollar ended the day slightly firmer against the U.S. dollar in quiet trade on Thursday, even as concerns about global growth weighed on markets and investors awaited key U.S. jobs data due out Friday.

"Canada is closing a little bit stronger but we haven't had a very big move here," said Matt Perrier, director of foreign exchange sales at BMO Capital Markets.

"If you look at Canada on a cross-related basis, that's where you see the strength. I think the U.S. dollar was bought up against a number of the major currencies, and Canada was bought up against it as well."

The Canadian dollar CAD=D4 ended the session at C$0.9755 to the U.S. dollar, or $1.0251, up slightly from Wednesday's North American session close at C$0.9794 to the U.S. dollar, or $1.0210.

Government debt and the Swiss franc gained after slowing factory output around the world renewed worries that the global economy is on the brink of recession, sparking a rally in safe-haven assets. [MKTS/GLOB]

Euro zone manufacturing activity contracted for the first time in almost two years in August, underlining investor concerns about a deteriorating global growth picture. [nL5E7K10NK]

While the pace of growth in U.S. factories in August was stronger than economists had forecast, it was still at its lowest level in two years. [nN1E7800NC]

The euro slipped against major currencies as better-than-expected U.S. manufacturing data did little to ease concerns about global growth and raise risk tolerance. [FRX/]

Canada broke with the global trend, with data showing the pace of manufacturing increased in August for a second straight month, driven by growth in both output and new orders. [CAPMIM=ECI]

Still, traders said volumes were low and the Canadian dollar was likely to trade in a narrow range ahead of Friday's U.S. nonfarm payrolls report.

"That's what's left on the docket before the long weekend ... and we'll take our cue from there, get a couple hours of trading out of it and then I think it's going to be a very quiet afternoon," Perrier said.

Markets are closed in Canada and the United States on Monday in observance of the Labor Day holiday.

Canadian bond prices pushed higher across the board, alongside U.S. Treasuries, with many investors anticipating further signs of weakness in the world's largest economy. [US/]

The two-year bond CA2YT=RR rose 12.5 Canadian cents to yield 1.015 percent, while the 10-year bond CA10YT=RR gained 80 Canadian cents to yield 2.401 percent. (Editing by Jeffrey Hodgson)

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