CANADA FX DEBT-C$ weakens to 2-week low versus U.S. dollar

Fri Jan 18, 2013 9:48am EST

* C$ hits 2-week low of C$0.9914 vs US$, or $1.0087
    * Also weakens to 9-month low against euro
    * Unexpectedly strong Canadian data fails to boost C$
    * Bond prices rise across the curve

    By Claire Sibonney
    TORONTO, Jan 18 (Reuters) - Canada's currency slid to a
two-week low against a broadly stronger U.S. dollar on Friday
after breaching a technical support level that pushed it out of
its recent range.
    The move marked an exit from the range of less than one U.S.
cent that it has held onto for the past couple weeks, which had
been capped by the C$0.9885, or $1.0116, level.
    "It's really one-way flow in favor of the U.S. dollar right
now ... it's the end of the week, it's bringing some position
squaring with it. There is no influential data that's coming out
of the market today in a meaningful way," said Jack Spitz,
managing director of foreign exchange at National Bank
Financial.
    The break prompted the currency to weaken as far as
C$0.9914, or $1.0087. Spitz saw the next significant area of
Canadian-dollar support around the 200-day moving average near
C$0.9983, or $1.0017.
    Investors largely ignored data on Friday that showed
Canadian manufacturing sales rebounded sharply in November, more
than compensating for the big slump in October. 
    At 9:27 a.m. (1427 GMT), the Canadian dollar stood
at C$0.9912 versus the greenback, or $1.0089, weaker than
Thursday's North American session close at C$0.9857, or $1.0145.
    Global equities rose on Friday and did not appear to be
positively correlated in their typical way with the Canadian
dollar and other commodity currencies which underperformed.
 
    "The traditional correlations between strong equities and a
weak dollar are breaking away in favor of better economics and
ultimately better bid for currencies that are related to those
economics," Spitz said.
    Trading in the euro crosses was much more volatile on Friday
as the euro hit a nine-month high against the Canadian dollar
 at C$1.3246, or 75.49 euro cents.
    Canadian bond prices climbed across the curve, tracking U.S.
Treasuries higher. Canada's two-year bond rose
2 Canadian cents to yield 1.188 percent, while the benchmark
10-year bond gained 25 Canadian cents to yield 1.923
percent.
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