CANADA FX DEBT-C$ steady after mixed North American data

Thu Nov 8, 2012 10:27am EST

* C$ at $0.9956 to the U.S. dollar, or $1.0044
    * Canada and U.S. trade deficits narrow on increased exports
    * Canadian housing starts fell in October
    * ECB holds interest rate steady
    * ECB says region shows no signs of recovering by year-end

    By Solarina Ho
    TORONTO, Nov 8 (Reuters) - Canada's dollar eked marginal
gains against the U.S. currency on Thursday following North
American economic data, which included rising exports in Canada
and the United States.
    Canada's trade deficit fell unexpectedly in September as
exports increased and imports were unchanged, Statistics Canada
data indicated. 
    Trade is a major driver of Canada's economy and analysts
cite the problems faced by exporters, such as a strong Canadian
dollar and weak foreign markets, as reasons for sluggish growth
in recent months.
    At 10:06 a.m. (1506 GMT), the Canadian dollar 
traded at C$0.9956 to the U.S. dollar, or $1.0044, slightly
firmer than Wednesday's North American close of C$0.9961, or
$1.0039.
    "The currency doesn't want to garner any kind of support
from what ordinarily would be a positive report. The backdrop of
commodities is kind of neutral. It's just one of those days
where there's not a lot of sense of direction right now," said
Michael Gregory, senior economist at BMO Capital Markets.
    The Canadian dollar was outperforming all of its major
currency counterparts, including the euro, which touched a
two-month low against the U.S. dollar after the European Central
Bank kept interest rates at a record low and said the region's
economy showed little signs of recovering before the end of the
year.  
    Also less positive for the Canadian economy was a report
that showed Canadian housing starts fell in October as both
single and multiple urban starts slumped. The Canada Mortgage
and Housing Corp's report confirmed the country's once-booming
housing market was slowing further. 
    South of the border, the U.S. trade deficit narrowed last
month as well on increasing exports, suggesting global demand
for U.S. goods was holding up despite the debt crisis in Europe.
    A separate report showed the number of Americans filing new
claims for unemployment benefits fell last week, suggesting the
labor market's slow recovery was gaining traction although
Superstorm Sandy distorted the data. 
    The currency was expected to trade around C$0.9900 and C$
1.0000, Rahim Madhavji, president at Knightsbridge Foreign
Exchange wrote in a note to clients, adding that the currency
was seeking direction from equities and commodities.
    The price of Canadian government debt mostly fell across the
curve. The two-year government of Canada bond fell 3
Canadian cents to yield 1.093 percent, while the benchmark
10-year bond shed 8 Canadian cents to yield 1.753
percent.
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