CANADA FX DEBT-C$ weakens after wholesale trade data disappoints

Tue May 20, 2014 4:34pm EDT

* Canadian dollar at C$1.0899 or 91.75 U.S. cents
    * Bond prices mixed across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, May 20 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday after data showed an unexpected
pullback in domestic wholesale trade in March.
    The loonie failed to hold above a key technical level but it
stayed within its recent trading range. Analysts said more
Canadian economic data later in the week, including retail sales
and inflation figures, could act as stronger catalysts.
    Wholesale trade declined by 0.4 percent in March, hurt in
part by weaker motor vehicle sales. The loonie added to declines
after the data was released. 
    A drop in the Australian dollar also weighed on the
Canadian dollar, said Scott Smith, senior market analyst at
Cambridge Mercantile Group in Calgary.
    The Australian dollar was hit after a central banker said
capital flows into the country are likely to slow. The Reserve
Bank of Australia also released minutes from its last meeting
that showed board members thought the current low interest rate
environment would be appropriate for some time. 
 
    The loonie often moves alongside the Aussie as both are
considered commodity-linked currencies. 
    "It's almost a trifecta of little things that have piled up
overnight and this morning that have led to some notable loonie
weakness today," Smith said.
     The Canadian dollar ended the North American
session at C$1.0899 to the greenback, or 91.75 U.S. cents,
weaker than Friday's official close of C$1.0857, or 92.11 U.S.
cents. Many market participants were away for Canada's Victoria
Day holiday on Monday.
    The next resistance level sits at C$1.0910, said Rahim
Madhavji, president of KnightsbridgeFX.com in Toronto. The
loonie touched a session low of C$1.0917 before paring its
declines.
    "We're back to a wait-and-see approach, probably continued
range-bound trading just slightly below C$1.09. We'll wait to
see how the data keeps impacting the way things move," Madhavji
said.
    Canadian government bond prices were mixed across the
maturity curve. The two-year was off half a Canadian
cent to yield 1.042 percent, and the benchmark 10-year
 was down 11 Canadian cents to yield 2.276 percent.

 (Editing by Peter Galloway)
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