CANADA FX DEBT-C$ firms on Aussie strength, focus on end of week

Mon Nov 4, 2013 9:42am EST

* C$ at C$1.0411 vs US$, or 96.05 U.S. cents
    * Aussie strength lifts commodity currencies
    * Investors focus on ECB, North American employment data
    * Canadian bond prices rise across the curve

    By Andrea Hopkins
    TORONTO, Nov 4 (Reuters) - The Canadian dollar firmed in
early trading on Monday as a stronger Australian dollar lifted
other commodity-linked currencies and traders looked to the end
of the week for direction on European central bank policy and
U.S. payrolls.
    The Australian and New Zealand dollars were modestly higher
across the board, underpinned by encouraging local data and
extended weakness in the euro. The Aussie drew comfort from a
flurry of mostly supportive data, the most important of which
was a strong lift in September retail sales. 
    "We've seen a big move in the Aussie overnight, which was
really domestically driven, but it seems to have taken the other
commodity currencies with it. So it has spilled over from Aussie
into the (Canadian dollar) and Kiwi and generally into a softer
U.S. dollar picture," said Adam Cole, global head of FX strategy
at Royal Bank of Canada in London.
    At 9:30 a.m. ET (1430 GMT), the Canadian dollar was
at C$1.0411 versus the U.S. dollar, or 96.05 U.S. cents,
stronger than Friday's North American session close at C$1.0427
versus the greenback, or 95.90 U.S. cents.
    Cole said the currency was expected to maintain a range
between C$1.0380 to C$1.0420, well off last week's lows, when
the Canadian dollar sank to C$1.0475, or 95.47 U.S. cents, after
the Bank of Canada dropped its tightening bias and investors
shifted expectations for a rate hike well into 2015. 
    The focus this week is on the European Central Bank and U.S.
and Canadian employment data. A drop in euro zone inflation to
well below the ECB's target level and firm money market rates
have convinced many investors that a shift in ECB policy is on
the way and looks set to support prices until the central bank
meets on Thursday. 
    The Bank of England also holds it policy meeting on Thursday
and is expected to keep rates on hold following a run of
improving UK economic data.
    The main North American event this week will be Friday's
U.S. payrolls report, which is expected to show a modest rise of
just 125,000 jobs in October, in the wake of last month's
government shutdown in Washington. 
    Canadian employment data is also due on Friday and expected
to show 13,500 new jobs added in October, after a gain of just
11,900 in September. 
    "Domestically in Canada obviously the October jobs report is
the only indicator of any significance, but we've also got all
the global event risk - in terms of central bank meetings, the
ECB in particular - and the U.S. payrolls report on Friday, so
there is a lot going on internationally that could drive the
currency," Cole said.
    Canadian government bond prices were higher across the
maturity curve. The two-year bond was up half a
Canadian cent to yield 1.120 percent, and the benchmark 10-year
bond rose 8 Canadian cents to yield 2.489 percent.
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