CANADA FX DEBT-C$ flat as focus shifts in U.S. budget talks

Thu Jan 3, 2013 9:48am EST

* C$ at C$0.9850 versus US$, or $1.0152
    * U.S. fiscal deal boost gives way to debt ceiling worry
    * North American employment data due out on Friday

    By Alastair Sharp
    TORONTO, Jan 3 (Reuters) - The Canadian dollar was flat
against its U.S. counterpart on Thursday as optimism over a deal
to avert fiscal calamity in the United States gave way to
concerns about issues that Washington has yet to resolve.
    The Canadian currency had strengthened sharply on Wednesday
after the fiscal deal was reached, but looming battles over
spending cuts and debt limits curtailed the celebration. 
    "With the lack of bipartisan support as far as politics
generally on Capitol Hill, we know we're going to have another
relatively fraught period with the debt ceiling and spending
scenarios coming around quickly," said Jeremy Stretch, head of
foreign exchange strategy at CIBC World Markets in London.
    "That's going to be one factor that will mitigate a strong
risk-on move being perpetuated." 
    At 9:28 a.m. (1428 GMT) the Canadian dollar was
trading at C$0.9850 to the greenback, or $1.0152, compared with
C$0.9852, or $1.0150, at Wednesday's North American close.
    Stretch said the Canadian dollar would find it difficult to
break past C$0.9840 in the short term.
    U.S. jobless claims rose last week and a private sector U.S.
employment report pointed to growth in the labor market ahead of
a key government reading due on Friday. 
 
    Canadian employment figures for December will also be
released on Friday. 
    Prices for Canadian government debt were lower across the
curve, with the two-year bond off half a Canadian
cent to yield 1.172 percent, while the benchmark 10-year bond
 fell 42 Canadian cents to yield 2.409 percent.
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