CANADA FX DEBT-C$ perks up on news from Europe, China

Thu Jan 10, 2013 9:45am EST

* C$ stronger at $0.9862 vs US$, or $1.0140
    * Bond prices ease across the curve

    By Claire Sibonney
    TORONTO, Jan 10 (Reuters) - The Canadian dollar firmed
against the greenback on Thursday as stronger-than-expected
Chinese exports boosted growth-linked currencies, while
encouraging remarks by the European Central Bank added to broad
pressure against the U.S. dollar.
    After keeping interest rates on hold, ECB President Mario
Draghi said at a news conference that the euro zone economy will
recover later in 2013 and there are already some signs of
stabilization. 
    "The ECB press conference certainly has provided a little
bit of a bid to the euro overall and is keeping the U.S. dollar
a little bit on the defensive," said Jeremy Stretch, head of
currency strategy at CIBC World Markets in London.
    "(It's) washed away some of the obvious and immediate
concerns about a bias toward rate cuts in Europe."
    Stretch noted that the Canadian dollar was taking more of
its cues from the international backdrop, despite disappointing
domestic indicators.
    Data on Thursday showed the value of building permits issued
in Canada during November tumbled to the lowest level since
January 2012 due mainly to a slowdown in housing and non-housing
construction in the most populous province, Ontario.
 
    On the upside for Canada's commodity-driven currency,
however, China surprised most observers by reporting its exports
had rebounded sharply in December to hit a seven-month high,
with imports growing at double the expected rate. 
    At 9:27 a.m. (1427 GMT), the Canadian dollar was
trading at C$0.9862 versus the greenback, or $1.0140, compared
with C$0.9877, or $1.0125 at Wednesday's close.
    Stretch noted some near-term resistance for the Canadian
dollar around C$0.9840. Overall, the Canadian dollar was
expected to remain strong despite the fact that January has been
negative for the currency in seven of the last 10 years.
    Investors will be paying close attention to Canadian trade
data for November on Friday and a speech later on Thursday by 
Tiff Macklem, a senior Bank of Canada official widely tipped to
replace the departing Governor Mark Carney.
    Canadian bond prices eased across the curve, tracking U.S.
Treasuries lower in amid the rally in riskier assets. The
two-year bond was off 6 Canadian cents to yield 1.196
percent, while the benchmark 10-year bond was down
44 Canadian cents to yield 1.955 percent.
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