CANADA FX DEBT-C$ pares gain after strong U.S. consumer data

Tue Nov 27, 2012 1:15pm EST

* C$ at $0.9933 vs US$, or $1.0067
    * U.S. data comes in better than expected
    * Global lenders broker deal to cut Greek debt
    * C$ expected to trade between C$0.9875 and C$0.9950
    * Bond prices mixed

    By Solarina Ho
    TORONTO, Nov 27 (Reuters) - The Canadian dollar 
pared early gains to trade flat against its U.S. counterpart on
Tuesday after data showed U.S. consumer confidence in November
rose to a four-and-a-half-year high. 
    The Canadian currency typically responds positively to signs
of growth in the economy of its southern neighbor and biggest
export market, and one analyst said the move might have more to
do with repositioning after a bounce in light trading last week.
    "All the economic data that's been released this morning, at
least in the U.S. session, generally met or exceeded
expectations," said David Tulk, chief Canada macro strategist at
TD Securities, referring to the consumer confidence index, house
price data and gauges of planned business spending and
manufacturing activity. 
    "So from that perspective, I'm inclined to think of this as
more of a couple of weeks worth of moves that's being dealt with
as opposed to just a momentary reaction to the data."
    Investors also let out a sigh of relief after the
International Monetary Fund (IMF) and Greece's euro zone
neighbors brokered a deal to cut Greek debt.
    After 12 hours of talks, global lenders agreed on a package
of measures to reduce Greek debt to 124 percent of gross
domestic product by 2020 and promised further measures to lower
it below 110 percent in 2022. 
    "The agreement overnight has buoyed risk-sensitive
currencies and we are seeing that flow into the Canadian
dollar," said John Curran, senior vice president at
CanadianForex.
    At 12:39 a.m. (1739 GMT), the currency was trading at
C$0.9933 to the U.S. dollar, or $1.0067, only slightly stronger
than Monday's North American close of C$0.9938, or $1.0062.
    The currency at one point hit C$0.9906, its strongest since
Nov. 7.
    Canada's dollar showed broad strength, outperforming most
other major currencies, including the euro, Japanese
yen and fellow commodities-linked currencies, the
Australian and New Zealand dollars.
    Curran said the currency would likely trade between C$0.9875
and C$0.9950 on Tuesday. He expected some U.S. dollar buying
interest around C$0.9880 to C$0.9900.
    "There's still longer term players looking to deleverage
their long-Canada positions just due to the ongoing fact that
our economic data has not been too great. And those are
longer-term factors. What's helping the Canadian dollar are
short-term factors," said Curran.
    "If we continue to see the Canadian economy losing steam,
you will see a selloff in the Canadian dollar. You have those
two opposing forces at each other."
    Prices for Canadian government debt were mixed, with the
two-year bond shedding half a Canadian cent to yield
1.106 percent and the benchmark 10-year bond adding
half a cent to yield 1.755 percent.
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