CANADA FX DEBT-C$ ekes out small gain ahead of data, Fed

Tue Jan 29, 2013 8:26am EST

* C$ at C$1.0056 versus US$, or 99.44 U.S. cents
    * Trading light ahead of major data, Fed policy meeting

    By Alastair Sharp
    TORONTO, Jan 29 (Reuters) - The Canadian dollar perked up
slightly against its U.S. counterpart on Tuesday, although trade
was subdued ahead of major North American economic data later in
the week.
    The Canadian currency appears to have settled into a fresh
range between C$1.01 and equal value to the U.S. dollar after
weakening sharply last week on a shift in Canada's monetary
policy outlook.
    It has disconnected from the tight correlation with
commodity prices and equity markets in recent weeks.
    "The Canadian dollar is used to doing its own thing lately,"
said David Bradley, director of foreign exchange trading at
Scotiabank. "We'll need some really positive data, not only out
of China but out of Europe and the U.S. as well, to see the
Canadian dollar rally significantly again."
    The currency dipped sharply last week after the Bank of
Canada said it would hold rates steady for longer than it had
previously expected, with tepid inflation data later in the week
backing up that stance. 
    Investors will be seeking clues about the strength of the
North American economy from U.S. fourth quarter GDP figures on
Wednesday and Canada's November growth numbers on Thursday.
    They will also pay close attention to the U.S. Federal
Reserve's two-day policy meeting starting later on Tuesday.
    Moody's cut the ratings of six Canadian lenders on Monday,
citing concerns about rising consumer debt and high housing
prices. 
    At 8:10 a.m. (1310 GMT) the Canadian dollar was
trading at C$1.0056 to the greenback, or 99.44 U.S. cents,
compared with C$1.0065, or 99.35 U.S. cents, at Monday's North
American close.
    Prices for the two-year bond were up 1 Canadian
cent to yield 1.148 percent, while the benchmark 10-year bond
 slipped 2 Canadian cents to yield 1.963 percent.
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