CANADA FX DEBT-C$ starts May on a weak note

Thu May 1, 2014 9:12am EDT

* Canadian dollar at C$1.0990 or 90.99 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Leah Schnurr
    TORONTO, May 1 (Reuters) - The Canadian dollar lost ground
against the greenback on Thursday, getting off to a soft note
for May as the currency entered what is typically a seasonally
weak period for the loonie.
    Investors were also digesting the outlook for global
economic growth as data showed growth in China's vast
manufacturing sector increased slightly in April, though the
figure came in just below expectations. 
    The loonie can be sensitive to economic developments out of
China but the data did not provide the currency with much
support on Thursday. China is the world's second-largest economy
and a major consumer of natural resources.
    Trading could be quieter than usual during the session with
May Day holidays in Europe and much of Asia.
    The Canadian dollar bounced higher through March as it
recovered from a 4-1/2-year low, but that rally ran out of
momentum through most of April. The currency has been
comfortable trading around either side of the C$1.10 level in
recent weeks.
    "There's a very definite seasonal tendency for the early- to
mid-part of May to be better for U.S. dollar-Canadian dollar and
it was very good for U.S. dollar-Canadian dollar last year,"
said Shaun Osborne, chief currency strategist at TD Securities
in Toronto.
    "The 2014 trading pattern to me looks a fair bit like what
we saw last year. So, given the bounce we had last year, given
the general seasonal trend over the last 15 or so years for May
to be a little bit better for the U.S. dollar from a seasonal
point of view, I do think we're close to a low point here."
    The Canadian dollar was at C$1.0990 to the
greenback, or 90.99 U.S. cents, weaker than Wednesday's close of
C$1.0960, or 91.24 U.S. cents.
    Ontario, Canada's most populous province and home to much of
its manufacturing sector, is due to release its budget later in
the day. While it does present risk for the currency, the
sustained impact is likely muted for Canadian dollar traders,
Camilla Sutton, chief currency strategist at Scotiabank, wrote
in a note.
    Investors were also turning their attention to Friday's U.S.
unemployment report for April, with the economy is expected to
have added 210,000 jobs. Canada will not release its labor
market report until next week. 
    Canadian government bond prices were mostly lower across the
maturity curve, though the two-year was up 0.4
Canadian cents to yield 1.079 percent, while the benchmark
10-year was off 1 Canadian cent to yield 2.407
percent.

 (Editing by Chizu Nomiyama)
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