CANADA FX DEBT-C$ softens after weak Chinese data

Tue May 13, 2014 4:32pm EDT

* Canadian dollar at C$1.0910 or 91.66 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, May 13 (Reuters) - The Canadian dollar was slightly
lower against the greenback on Tuesday, weighed by disappointing
Chinese data, while a light domestic economic calendar this week
left the currency searching for direction.
    Data overseas showed China's economic activity was weak
across the board last month, with figures from output to
investment and consumption missing market expectations.
 
    The Canadian dollar is often sensitive to data out of China,
the world's second-largest economy and a major consumer of
natural resources.
    "That again signals that growth is slowing in the region,"
said Scott Smith, senior market analyst at Cambridge Mercantile
Group in Calgary.
    "What policymakers have said is essentially coming true,
where growth is transitioning to more of a sustainable
trajectory and we're not going to see that credit-fueled
reflation in the economy."
    At home, the economic calendar is thin this week, with no
major reports expected until March manufacturing sales on
Thursday.
    The Canadian dollar ended the North American
session at C$1.0910 to the greenback, or 91.66 U.S. cents,
slightly weaker than Monday's close of C$1.0897, or 91.77 U.S.
cents.
    After whipsaw trading sent the loonie through some key
technical barriers last week, Smith sees the C$1.09 level acting
as a pivot for the currency.
    The euro was lower against the Canadian dollar after sources
said the German central bank is ready to support European
Central Bank policy action if it is needed. 
    Earlier, The Wall Street Journal, citing a person familiar
with the matter, reported the Bundesbank was willing to back an
array of stimulus measures from the ECB next month. The euro was
at C$1.5082.
    The report gave strength to the U.S. dollar, which also kept
pressure on the Canadian dollar against the greenback.
    After trading in a tight range for weeks, the loonie broke
strongly higher last week, only for the currency to give back
those gains following data on Friday that showed the Canadian
economy unexpectedly shed jobs last month.
    "It's a neutral trading range and we're going to have to
wait for the next catalyst to move things along because everyone
seems quite content to see the loonie where it is," said Rahim
Madhavji, president at KnightsbridgeFX.com in Toronto. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1-1/2 Canadian
cents to yield 1.065 percent and the benchmark 10-year
 up 43 Canadian cents to yield 2.356 percent.

 (Editing by Meredith Mazzilli)
FILED UNDER: