CANADA FX DEBT-C$ softens after U.S. data disappoints

Fri Apr 12, 2013 9:56am EDT

* C$ at C$1.0126 vs US$, or 98.76 U.S. cents
    * U.S. retail sales unexpectedly fall in March
    * TD sees C$ seen trading between C$1.0110 and C$1.0175
    * Bond prices rise across the curve

    By Solarina Ho
    TORONTO, April 12 (Reuters) - The Canadian dollar was weaker
against the U.S. dollar on Friday following its best performance
in nearly two months on Thursday, after disappointing U.S. data
signaled flagging momentum in Canada's largest export market.
    U.S. retail sales contracted in March for the second time in
three months, falling 0.4 percent, which was below analysts'
expectations of a flat month in sales. 
    A separate report showed wholesale prices fell sharply last
month due to lower gasoline costs.
    Shaun Osborne, chief currency strategist at TD Securities,
said the currency moves on the data were "negligible" and the
currency has been consolidating overall this week.
    "The U.S. numbers tend to reflect a trend that we've seen
before ... whereby we see the data through spring tend to
disappoint," said Osborne. "Worries about a soft patch start to
perhaps percolate through the market. We think it is something
we have to keep in mind over the course of the next few weeks
here."
    At 9:19 a.m. (1419 GMT), the Canadian dollar was
trading at C$1.0126 versus the U.S. dollar, or 98.76 U.S. cents,
weaker than Thursday's close of C$1.0107, or 98.94 U.S. cents.
    It briefly weakened to a session low of C$1.0137, or 98.65
U.S. cents after the U.S. sales data.
    The currency's performance was mixed against other major
currencies. It was stronger against the euro and also
the New Zealand dollar after touching its weakest
level since mid-2005.
    It was weaker than the Australian dollar and the
Japanese yen. Against the yen, it had touched its
firmest level in about 4-1/2 years earlier this week.
    For the session, the Canadian dollar was expected to trade
between C$1.0110 and C$1.0175, said Osborne.
    "There's been a pretty decent correction in the Canadian
dollar over the last two, three weeks. We're probably close to
the Canadian sell levels again," he said, adding he's looking to
buy U.S. dollars on dips below C$1.01.
    The price of Canadian government debt was higher across the
curve, with the two-year bond climbing 3 Canadian
cents to yield 0.965 percent and the benchmark 10-year bond
 rising 33 Canadian cents to yield 1.749 percent.
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