CANADA FX DEBT-C$ firms to highest level in over two weeks

Tue May 27, 2014 9:39am EDT

* Canadian dollar at C$1.0843 or 92.23 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, May 27 (Reuters) - The Canadian dollar firmed
against the greenback on Tuesday to its highest level in over
two weeks, though it was not expected to stray from its trading
range as investors await key economic reports at the end of the
week.
    With no major domestic data on the calendar, investors took
in reports south of the border, including figures that showed
orders for long-lasting U.S. manufactured goods unexpectedly
rose last month. The loonie edged higher following the data.
 
    At home, markets will get a report on the current account on
Thursday and first-quarter economic growth on Friday, while
focus is also turning to the Bank of Canada's policy statement
next week. Investors will be watching to see if the central
bank's tone turns less dovish following last week's pick up in
the inflation rate.
    "You've had a modest strengthening bias for Canada, there's
a bit of a hangover effect from the firmer CPI," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada in Toronto.
    The Canadian dollar was at C$1.0843 to the
greenback, or 92.23 U.S. cents, stronger than Monday's close of
C$1.0860, or 92.08 U.S. cents.
    The loonie touched a high of C$1.0836 in early morning
trading, its highest level since early May.
    Still, the currency was in the range it has been in in
recent weeks as investors weigh generally improving domestic
economic data against a central bank that has kept its policy
neutral.
    "Gradually people are dispelling themselves of this notion
that the U.S. is doing great and Canada is really failing, and
it's more a question of the U.S. seems to be doing quite well
and Canada is doing quite well, just maybe not as strong,"
Chandler said.
    Canadian government bond prices were higher across the
maturity curve, with the two-year up half a Canadian
cent to yield 1.055 percent and the benchmark 10-year
 up 17 Canadian cents to yield 2.305 percent.

 (Editing by Chizu Nomiyama)
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