CANADA FX DEBT-C$ nears 3-week low vs U.S. dollar

Fri Jan 18, 2013 4:33pm EST

* C$ ends at C$0.9918, or $1.0083, finishes week off 0.7 pct
    * C$ touches 9-month low against euro, 2-1/2 year high vs
yen
    * 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 near
three-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.
    "There was more U.S.-dollar buying from the sort of
real-money accounts right off the open (but) there was no
obvious catalyst," said Shaun Osborne, chief currency strategist
at TD Securities. 
    The Canadian dollar was underperforming most of the other
major currencies, except for the British pound and Norwegian
krone.
    "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$0.9947, or $1.0053. Spitz saw the next significant area of
Canadian-dollar support around the 200-day moving average near
C$0.9984, or $1.0016. On the way there, he said there is a
"myriad of corporate orders that are offered anywhere in the
C$0.99s."
    Investors largely ignored data on Friday that showed
Canadian manufacturing sales rebounded sharply in November, more
than compensating for the big slump in October. 
    The Canadian dollar ended the North American
session at C$0.9918 versus the greenback, or $1.0083, weaker
than Thursday's North American session close at C$0.9857, or
$1.0145. The currency finished the week down 0.7 percent.
    Global equities largely 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.
    Still, TD's Osborne noted that in terms of cross market
correlations, the Canadian dollar has a significantly closer
link to stocks at around 80 percent, compared with crude, at
less than 40 percent. He said the currency's correlation with
the S&P 500 is approaching peak levels of 80 to 90 percent that
were sustained through mid-2012.   
    Trading in the euro and yen crosses were much more volatile
on Friday. The Canadian dollar crept up to a 2-1/2 year intraday
high against the yen at 91.35 yen, and a nine-month
low against the euro at C$1.3244, or 75.51 euro cents.
    Canadian bond prices climbed across the curve, tracking U.S.
Treasuries higher. Canada's two-year bond rose
4 Canadian cents to yield 1.178 percent, while the benchmark
10-year bond gained 32 Canadian cents to yield 1.915
percent.
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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