CANADA FX DEBT-C$ firms moderately, sentiment stays cautious

Thu Nov 15, 2012 10:02am EST

* Canadian dollar at C$1.0011 vs US$, or 99.89 U.S. cents
    * U.S. jobless claims surge on Sandy
    * Canadian manufacturing sales up on aerospace gains
    * Focus stays on U.S. fiscal cliff, Europe debt crisis

    By Solarina Ho
    TORONTO, Nov 15 (Reuters) - The Canadian dollar edged
modestly higher against the U.S. dollar on Thursday, but North
American economic data failed to push the currency out of a
recent tight trading range.
    "It's the range we've become unfortunately accustomed to.
It's hard to read into a couple of pips one way or another,"
said David Tulk, chief Canada macro strategist at TD Securities.
    Canadian manufacturing sales rose 0.4 percent in September
from August, mainly on a sharp rise in aerospace, but sales fell
in the heavyweight auto industry and in most other industries,
according to Statistics Canada. 
    In the United States, new claims for U.S. jobless benefits
surged to a 1-1/2 year high last week following devastating
superstorm Sandy. 
    "Jobless claims is going to be skewed by the hurricane, so
we can't read too much into that," Tulk said. "(There's) nothing
too much on the data front to really alter sentiment from a very
weak starting point overnight." 
    Tulk said the Canadian data met market expectations, but
that he still considered it a bit weaker given the strength was
mostly attributed to the volatile aerospace sector.
    The Canadian dollar was trading at C$1.0011 versus
the U.S. dollar, or 99.89 U.S. cents. This was firmer than
Wednesday's North American finish of C$1.0038, or 99.62 U.S.
cents.
    The Canadian dollar could retest the C$1.0040 level,
according to TD's daily FX outlook, with support remaining
around the C$0.9985 to C$0.9995 area. The currency has been
trading within this range for the past week.
    The currency's performance was mixed against a basket of
other major currencies, underperforming against the euro, but
outperforming against other commodity currencies such as the
Australian dollar. 
    Ongoing nervousness over Europe's debt crisis and over how
the United States will address its fiscal problems have kept
investors away from assets, such as the commodity-linked
Canadian dollar, considered to be risky.
    Prices for Canadian government debt were lower across the
curve, with the two-year bond falling 1.5 Canadian
cents to yield 1.081 percent, while the benchmark 10-year bond
 fell 13 Canadian cents to yield 1.715 percent.
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