CANADA FX DEBT-C$ gains against a string of global currencies

Thu Jul 18, 2013 4:54pm EDT

* C$1.0376 vs US$, or 96.38 U.S. cents
    * Decent North American data helps both currencies

    By Alastair Sharp
    TORONTO, July 18 (Reuters) - The Canadian dollar gained
against its U.S. counterpart and surged versus a string of other
major currencies on Thursday, as stronger-than-expected
second-tier data helped both North American currencies climb
against global peers.
    The loonie, as Canada's currency is colloquially known, rose
strongly against the yen as investors reduced
exposure to the Japanese currency ahead of a weekend election.
It also notched solid gains against the Australian dollar
.
    John Curran, a senior vice president at CanadianForex, said
recent signposting of monetary policy direction, most recently
by the U.S. Federal Reserve and the Bank of Canada, has made
data on the state of housing, labor and manufacturing more
relevant for currency traders.
    "It's getting back to traditional positioning where you have
to look at all the data points for all the countries concerned.
And it is a little more difficult to do than just simple
'risk-on risk-off'," he said.
    He suggested that recent overly enthusiastic bets on
greenback strength were pared back, helping the Canadian dollar.
    The number of Americans filing new claims for jobless
benefits dropped last week and factory activity picked up in the
mid-Atlantic region in early July, signs of a stronger economy
in Canada's largest trading partner. 
    Meanwhile, Canadian wholesale trade grew by a
stronger-than-expected 2.3 percent in May from April, the
biggest monthly jump since January 2011, due mainly to higher
sales of fertilizer and food, Statistics Canada said on
Thursday. 
    While the data was supportive, currency traders remain
focused on possible plans by the Federal Reserve to move away
from ultra-loose monetary policy soon. The prospect of less
stimulus has boosted the U.S. dollar against a range of
currencies.
    "That's the default position at the moment; if there's no
news the (U.S.) dollar grinds up," said Adam Cole, global head
of currency strategy at Royal Bank of Canada. "And the Canadian
dollar has suffered least, as it generally does when markets are
dollar-directional."
    Fed Chairman Ben Bernanke ended two days of testimony to
U.S. lawmakers on Thursday in which he said the central bank
still expects to start scaling back its massive bond purchase
program, but could change its plan if the economic outlook
shifted. 
    The Canadian dollar ending the session at C$1.0376
to the greenback, or 96.38 U.S. cents, stronger than its
Wednesday close of C$1.0414, or 96.02 U.S. cents.
    The price of Canadian government debt was mixed, with rises
at the short end and falls further along the curve. The two-year
bond was off one Canadian cent to yield 1.095
percent, while the benchmark 10-year bond fell 22
Canadian cents to yield 2.401 percent.
FILED UNDER:
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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