CANADA FX DEBT-C$ extends gains to 2-wk high as growth data tops forecasts

Tue Apr 30, 2013 9:49am EDT

* C$ at C$1.0100 vs US$, or 99.01 U.S. cents
    * Canada Feb GDP grew 0.3 pct, Jan also revised upward to
0.3 pct
    * Euro hit by weak data; fuels expectations of ECB rate cut
    * Bond prices rise across curve

    By Solarina Ho
    TORONTO, April 30 (Reuters) - The Canadian dollar firmed to
a two-week high against the U.S. dollar on Tuesday after the
release of stronger-than-expected domestic gross domestic
product data that showed economic growth gained momentum in
February.
    Monthly GDP by industry grew 0.3 percent, Statistics Canada
said Tuesday, which also revised upward its growth estimate for
January, to 0.3 percent from 0.2 percent.
    The hard-hit manufacturing sector continued to recover with
0.8 percent growth, while the end of a labor dispute in
professional hockey continued to boost the arts and
entertainment sector. 
    "The strength was pretty broad. We saw very strong growth in
mining, which tends to be a little bit more volatile ... It
brings in some upside risks to our forecasts, there's no doubt
about that," said Robert Kavcic, senior economist at BMO Capital
Markets, adding that 2 percent quarterly growth is no longer
impossible.
    "We haven't seen 2 percent growth on a quarterly basis in
the Canadian economy for some time ... it was definitely
positive for the currency."
    At 9:34 a.m. (1334 GMT), the Canadian dollar was
trading at C$1.0100 versus the U.S. dollar, or 99.01 U.S. cents,
stronger than shortly before the data was released and stronger
than Monday's finish at C$1.0116, or 98.85 U.S. cents.
    The U.S. dollar also continued to be pressured by
expectations the Federal Reserve's ultra-loose monetary policy
will be maintained at two-day talks ending Wednesday. 
    The Canadian dollar was outperforming most other currencies,
and touched its strongest level against the euro in about two
weeks. The euro zone common currency weakened after poor
economic data added to expectations the European Central Bank
will cut interest rates this week. 
    The price of Canadian government debt was higher across the
curve, with the two-year bond up just shy of a
Canadian cent, yielding 0.929 percent, and the benchmark 10-year
bond gaining 11 Canadian cents to yield 1.690
percent.
FILED UNDER:
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.