CANADA FX DEBT-C$ flat as focus turns to Friday's employment data

Wed Feb 5, 2014 4:42pm EST

* Canadian dollar at C$1.1080 or 90.25 U.S. cents
    * Bond prices lower across maturity curve


    By Leah Schnurr
    TORONTO, Feb 5 (Reuters) - The Canadian dollar ended nearly
flat against the greenback on Wednesday as the market sought
direction after a recent correction and as investors trained
their focus on key employment reports in both Canada and the
United States at the end of the week.
    Disappointing economic data added to the softer tone as the
value of Canadian building permits fell unexpectedly in
December, with residential permits sinking for a second straight
month. 
    After hitting a 4-1/2-year low last week, the loonie has
managed to regain some ground in recent days as investors book
profits.
    "I still think the general tone is probably corrective for
the Canadian dollar, we saw a pretty significant turnaround of
the liquidation trade late last week," said Shaun Osborne, chief
currency strategist at TD Securities in Toronto.
    Still, analysts say the factors that have pressured the
loonie over the past few months - including a more dovish stance
from the Bank of Canada - have not gone away and are likely to
continue to weigh on the currency.
    "I think this is a pause in the trend. You've got to
remember we've come from C$1.02 in September up to C$1.12
without any real correction at all," Osborne said.
    "So I wouldn't be at all surprised to see a bit of a
shakeout just from a short-term point of view, but we still
think that you've got to be looking to get long U.S.
dollar-Canadian dollar."
    The Canadian dollar ended the North American
session at C$1.1080 to the greenback, or 90.25 U.S. cents, a tad
stronger than Tuesday's close of C$1.1081, or 90.24 U.S. cents.
    Investors were looking ahead to Friday's Canadian employment
report, which is expected to show hiring picked up in January
after the economy unexpectedly shed jobs at the end of last
year.
    At the same time, data in the United States is expected to
show the world's largest economy added 185,000 jobs last month
after disappointing job growth in December. Data earlier on
Wednesday showed U.S. private employers added 175,000 jobs last
month, just shy of economists' expectations for 180,000.
 
    "For the most part, it seems like we're going to have
rangebound trading until payrolls data comes out, which is a
pretty big piece of data for the end of the week," said Rahim
Madhavji, president at KnightsbridgeFX.com in Toronto.
    "From there, we'll start to gain some direction."
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3.2 Canadian
cents to yield 0.978 percent and the benchmark 10-year
 off 26 Canadian cents to yield 2.383 percent.
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