CANADA FX DEBT-C$ pulls back from near 3-month high

Thu Apr 10, 2014 4:38pm EDT

* Canadian dollar at C$1.0929 or 91.50 U.S. cents
    * Markets take risk-averse tone, U.S. dollar slides on
dovish Fed
    * Bond prices higher across the maturity curve

 (Updates to close)
    By Andrea Hopkins
    TORONTO, April 10 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday, pulling back from a nearly
three-month high in the previous session as investors
consolidated positions after the currency's recent string of
gains.
    The U.S. dollar dropped to three-week lows against the yen
and the Swiss franc, sliding for a second straight day after
minutes of the U.S. Federal Reserve's March meeting disappointed
investors who had been positioned for an interest rate hike
early next year. 
    The Fed minutes also overshadowed U.S. data that showed
first-time claims for jobless benefits fell more than expected
last week to their lowest level since May 2007. 
    The Canadian dollar was a laggard among major currencies,
along with the Swedish crown and New Zealand dollar, helping the
loonie weaken even as the U.S. dollar softened.
    "There has been a slow melt up in dollar-Canada since
mid-morning. Equities are eroding, we're seeing some erosion in
certain commodities - crude is down, reversing some gains
earlier in the week," said Jack Spitz, managing director of
foreign exchange at National Bank Financial.
    "Ultimately the market is squaring up positions in an
environment that appears to be more risk averse."
    The Canadian dollar ended the North American
session at C$1.0929 to the greenback, or 91.50 U.S. cents,
weaker than Wednesday's close of C$1.0872, or 91.98 U.S. cents.
    The loonie, which came under intense selling pressure
earlier in the year, has climbed about 3 percent since hitting a
4-1/2-year low in mid-March. Some signs of strength in the
domestic economy have boosted sentiment, prompting investors to
cover short positions.
    Spitz said the dollar-CAD would find topside resistance at
C$1.0960, with "fairly decent" offer interest above C$1.10, and
support between C$1.0910 and the C$1.0860 high seen earlier this
week.
    With little on the domestic economic calendar in the coming
days, investors are turning their attention to the Bank of
Canada's policy-setting meeting next Wednesday. The central
bank's more dovish tone has hit the loonie hard in the last few
months and markets will be watching to see if its stance
changes.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.5 Canadian
cents to yield 1.056 percent, and the benchmark 10-year
 up 25 Canadian cents to yield 2.438 percent.

 (Reporting by Andrea Hopkins, editing by G Crosse)
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