CANADA FX DEBT-C$ edges higher, trade light before U.S. holiday

Wed Nov 21, 2012 5:06pm EST

* C$ ends at C$0.9965 versus US$, or $1.0035
    * Commodity prices, stocks also gain
    * No agreement yet over loans to Greece
    * U.S. data paints mixed picture

    By Alastair Sharp
    TORONTO, Nov 21 (Reuters) - The Canadian dollar eked out a
slight gain against its U.S. counterpart on Wednesday, mirroring
a modest rise in stock and commodity prices, even as
international lenders failed to come to agreement over loans to
debt-ridden Greece.
    Investors appeared content with assurances that a debt deal
with Greece was near, while the upcoming U.S. Thanksgiving
holiday limited trade volumes between the North American
currencies. 
    Analysts said given the holiday and other factors, it
appeared unlikely the Canadian currency would extend gains much
further in the near term.
    "People are focusing away from Aussie and Canada, the
commodities-based currencies don't seem to be the play at the
moment," said Darcy Browne, managing director of foreign
exchange sales at CIBC World Markets.
    He pointed to robust interest in euro and yen trades given
the potential for a change of government in Japan and the
ongoing negotiations over loans for Greece.
    "Looking at bigger picture stuff like the S&P below 1,400
and oil below $90 I don't know if there's any real reason to run
out there and buy the Canadian dollar at these levels," he said.
    The Canadian dollar closed trade at C$0.9965 versus
the greenback, or $1.0035, marginally stronger than Tuesday's
North American session finish of C$0.9973, or $1.0027.
    The currency was confined to a tight range between C$0.9950
and parity as buyers and sellers emerged at either end of that
range, Browne said.
    The euro recovered after a slide following a meeting of euro
zone finance ministers, the International Monetary Fund and the
European Central Bank which ended without agreement on the next
tranche of loans to Athens. 
    "There's a lot of the concern with what's going on with
Greece overnight ... It's creating a bit more uncertainty on
that front," said Charles St-Arnaud, economist and currency
strategist with Nomura Securities in New York.
    "I'm actually surprised how resilient the Canadian dollar
has been over the past few weeks." 
    "The Canadian dollar has been trading a lot with risk
appetite over the last few days and weeks. With all the
uncertainty it's still a bit hard to see a big rally," said
St-Arnaud.
    Canada's dollar performed better than the Australian dollar
 and yen, hitting its strongest level in
nearly 7 months against the Japanese currency. But it weakened
against the pound and Swiss franc.
    Data out of the United States on Wednesday painted a mixed
picture, with manufacturing growing at its quickest pace in five
months and unemployment claims dropping, while consumer
sentiment stalled as worries grow about looming automatic tax
hikes and government spending cuts. 
    Prices for Canadian government debt were weaker across the
curve, with the two-year bond off 1 Canadian cent to
yield 1.120 percent and the benchmark 10-year bond 
slipping 11 Canadian cents to yield 1.769 percent.
FILED UNDER: