CANADA FX DEBT-C$ ends weaker after hitting 2-week low vs US$

Mon Feb 11, 2013 5:19pm EST

* C$ at 1.0043 vs US$, or 99.57 U.S. cents
    * C$ firms against yen, Australian dollar, sterling
    * Bond prices weaker across curve

    By Solarina Ho
    TORONTO, Feb 11 (Reuters) - Canada's dollar closed weaker
against the U.S. currency on Monday and touched its softest
level in two weeks, extending a sharp decline on Friday that
followed unexpectedly weak Canadian economic data.
    The currency struggled in the wake of Friday's reports that
showed surprise job losses in January and lower-than-expected
housing starts. 
    "The Canadian dollar came into this week on soft footing
after the employment numbers and that continued to be the
driver," said Adam Button, currency analyst at ForexLive in
Montreal, noting the quiet trading due to the Lunar New Year
holiday in Asia.
    "The market on such a quiet day was hesitant to try to push
through C$1.01 or even to seriously challenge it. As a result,
we saw a steady round of profit-taking throughout the
afternoon."
    The currency finished its North American session at
C$1.0043 against the U.S. dollar, or 99.57 U.S. cents, weaker
than the previous session's close at C$1.0027, or 99.73 U.S.
cents.
    The Canadian dollar was weaker than most other major
currencies, except for the Japanese yen and the
sterling and the Australian dollar. The
Canadian dollar climbed 1.6 percent on Monday against the yen.
    "Really the action has been coming on the Canadian dollar
crosses," said Button. "There's a great deal of focus this week
on the G20 and what they might say on exchange rates."
    With the United States, Britain, the European Central Bank
and Japan all resorting to unconventional monetary levers to
revive their economies, finance ministers and central bank heads
from the G20 group of the world's biggest advanced and
developing economies are expected to discuss the spillover of
such policies and their exchange rate effects this weekend in
Moscow. 
    U.S. Treasury Undersecretary for International Affairs Lael
Brainard said on Monday afternoon that G20 member nations must
avoid beggar-thy-neighbor currency policies and the richest
members need to stick to their long-standing rule to let market
forces set their exchange rates. 
    U.S. retail sales on Wednesday and a Bank of Japan meeting
later in the week will also be potential currency drivers.
    "There's a lot going on and I think Canada's going to get
dragged along with the overall risk sentiment. I think there's
enough event risk this week, not Canada specific," said Steve
Butler, managing director of foreign exchange trading at
Scotiabank.
    Canadian government bond prices were lower across the curve,
with the price of a two-year bond down 2 Canadian
cents to yield 1.116 percent and the benchmark 10-year bond
 down 14 Canadian cents, yielding 1.973 percent.
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