CANADA FX DEBT-C$ gains to two-week high on firm building permits data

Thu Mar 6, 2014 9:53am EST

* Canadian dollar at C$1.1001 or 90.90 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, March 6 (Reuters) - The Canadian dollar firmed
against the greenback to a two-week high Thursday on sturdy
building permits data in January, though gains could be capped
as investors positioned ahead of U.S. and Canadian employment
data due out on Friday.
    Data showed the value of building permits issued in Canada
jumped 8.5 percent in January, far surpassing the 1 percent
increase economists had forecast. As well, construction
intentions in the residential sector hit a record high.
 
    The loonie also benefited from some better risk appetite in
markets overnight, as investors were hopeful there would be
diplomatic efforts to cool the crisis in Ukraine as European
leaders gathered for an emergency summit. 
    "What we're seeing is the hope or expectation that there
will be a diplomatic resolution to everything," said Scott
Smith, senior market analyst at Cambridge Mercantile Group in
Calgary.
    Even so, Crimea's parliament voted to join Russia, setting a
referendum within 10 days that could potentially mark an
escalation of tensions in the region.
    The Canadian dollar was at C$1.1001 to the
greenback, or 90.90 U.S. cents, stronger than Wednesday's close
of C$1.1038, or 90.60 U.S. cents. The loonie hit a session high
of C$1.0992, its highest since Feb. 19.
    Investors were also turning their attention to unemployment
data that will be released early Friday in both Canada and the
United States. Canada is forecast to have added 15,000 jobs in
February, a slower pace that the month before, while the
unemployment rate is seen holding steady at 7 percent.
    Market participants were digesting Wednesday's strong move
higher for the Canadian dollar after the Bank of Canada kept to
its neutral policy stance, rather than turning even more dovish
as some had feared.
    "I could see us taking a little bit of a pause today after
the move yesterday with the loonie strength," said Smith. 
    "At this point, we'll probably start to see traders
jockeying for position ahead the nonfarm payrolls in the U.S.
and the Canadian data, too."
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 3 Canadian
cents to yield 1.060 percent and the benchmark 10-year
 down 36 Canadian cents to yield 2.517 percent.
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