CANADA FX DEBT-C$ slips vs US$, climbs near 3-year high vs yen
* C$ ends at C$0.9980 vs US$, or $1.0020 * C$ hits 2-week high against euro * C$ matches April 2010 high versus yen * Bond prices little changed across curve By Claire Sibonney TORONTO, Feb 7 (Reuters) - The Canadian dollar fell against its U.S. counterpart on Thursday after weak North American data reminded the market there are still headwinds facing economic growth and after comments by the ECB raised worries about the outlook for Europe. The currency took some cues from major global stock markets, which fell after European Central Bank President Mario Draghi voiced concerns about the impact of the recent strength of the euro on the euro zone economy, opening the door for a possible rate cut. "The whole risk-on/risk-off (correlation) is starting to show some signs of wearing down, but I suspect it's not gone from our market entirely," said Shaun Osborne, chief currency strategist at TD Securities. "At the moment if we see a big off-day in stocks, we probably will see the sort of high-beta commodity currencies underperform to a degree." Also weighing on sentiment, Canadian building permits posted their biggest two-month drop in at least 24 years in December, though prices of new homes ended the year 2.3 percent higher than in December 2011. In the United States, initial jobless claims fell less than expected in the latest week and U.S. productivity dropped sharply in the fourth quarter. BIG MOVES ON CROSSES The Canadian dollar ended the North American session at C$0.9980 against the greenback, or $1.0020, weaker than Wednesday's finish of C$0.9955, or C$1.0045. Market players will be eyeing Friday's Canadian employment report for January for further direction. Canada's labor market likely came back to earth in January after gravity-defying job gains in the final months of 2012, with analysts predicting almost no new hiring in the month and a rise in the unemployment rate. Analysts noted that the U.S.-Canada currency pair is still fairly rangebound, moving in a narrow 60-odd-point band this week between C$0.9932-95. Osborne pointed to significant U.S.-dollar buying demand around C$0.9950 and selling interest towards parity with the Canadian dollar. A Reuters poll released on Wednesday showed economists and foreign exchange strategists expected the Canadian dollar to strengthen over the course of 2013, looking past the Bank of Canada's recent dovish comments and finding support from an improving U.S. economy. On the crosses on Thursday the Canadian dollar hit a two-week high versus the euro. Against the yen it rose to its strongest level since April 2010. "Anything that is relevant in Canada at the moment seems to be happening on the crosses," Osborne said. Canadian government bond prices were little changed across the curve, with the two-year bond up less than one Canadian cent to yield 1.156 percent, and the benchmark 10-year bond off 4 Canadian cents to yield 2.000 percent.
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