CANADA FX DEBT-C$ stays range-bound; focus shifts to data next week

Fri May 16, 2014 4:23pm EDT

* Canadian dollar at C$1.0857 or 92.11 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, May 16 (Reuters) - The Canadian dollar was little
changed against the greenback on Friday, sticking to its recent
trading range as investors turned their attention to key
economic reports on tap next week.
    After some sharp gains in the last two weeks, the loonie has
consolidated this week as it has found few catalysts to push it
decisively in either direction.
    The loonie touched a four-month high last week, trading in
the low C$1.08s, but snapped back after a disappointing domestic
jobs report last Friday. Analysts expect the currency will be
comfortable around either side of C$1.10 in the near term.
    "The loonie is just keeping calm and carrying on," said
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    "This week was really characterized by just taking stock of
what has happened the previous two weeks and looking on a
go-forward basis at how traders want to position in U.S.
dollar-Canadian dollar."
    The Canadian dollar ended the North American
session at C$1.0857 to the greenback, or 92.11 U.S. cents,
modestly firmer than Thursday's close of C$1.0877, or 91.94 U.S.
cents. Trading was also muted heading into a long weekend with
Canadian markets closed on Monday for the Victoria Day holiday.
    Data showed foreign investors sold C$1.23 billion ($1.13
billion) worth of Canadian securities in March, the first
divestment this year, while domestic purchases of overseas
assets hit a 16-month high. 
    A light economic calendar this week, as well as a mixed
batch of U.S. data, has left the Canadian dollar in a narrow
range, said Don Mikolich, executive director of foreign exchange
sales at CIBC World Markets in Toronto.
    While next week will also be a quiet one for data, investors
will get two key reports with March retail sales and April
inflation next Thursday and Friday.
    "We need to see a little bit more data next week. We'll get
retail sales and CPI so that gives an opportunity for the Bank
of Canada to indicate where its thinking is on future
tightening," said Mikolich.
    Canadian government bond yields picked up slightly, lifting
the benchmark 10-year off the trough hit on Thursday
that brought it to its lowest level since last June.
    Canadian bonds had moved alongside a rally in U.S.
Treasuries on Thursday. While the sudden move did not have much
impact on foreign exchange markets, analysts said it will likely
remain on the radar screen heading into next week.
    The Canadian 10-year was down 8 Canadian cents to yield
2.264 percent, while the two-year was off 0.3
Canadian cents to yield 1.039 percent.

 (Editing by James Dalgleish)
FILED UNDER: