CANADA FX DEBT-C$ at 5-1/2 month high after encouraging China data

Mon Jun 23, 2014 9:41am EDT

* Canadian dollar at C$1.0737 or 93.14 U.S. cents
    * Bond prices mixed across the maturity curve

    By Leah Schnurr
    TORONTO, June 23 (Reuters) - The Canadian dollar firmed
against the greenback to its highest level in over five months
on Monday, extending last week's strength as it was boosted by
data that showed China's factory sector expanded in June.
    The loonie gained in four out of five sessions last week and
rallied on Friday's data that showed an unexpectedly strong pick
up in Canadian inflation for May and robust retail sales in
April. 
    With little on the domestic economic calendar this week,
investors were taking their cues from overseas. A pick up in
activity in China's factories for the first time in six months,
albeit at a modest pace, beat expectations and gave new signs
the world's second-largest economy was stabilizing.
 
    The Canadian dollar is often sensitive to economic data from
China, which is a major consumer of natural resources. 
    "The move into expansionary territory for Chinese PMI for
the first time this year has definitely been a good boost for
the loonie, as it increases the prospects for the export sector
moving forward," said Scott Smith, senior market analyst at
Cambridge Mercantile Group in Calgary.
    "From a technical perspective, with the move through C$1.08
and then C$1.0750, there's definitely room in the short-term for
the momentum to continue."
    The Canadian dollar was at C$1.0737 to the
greenback, or 93.14 U.S. cents, stronger than Friday's close of
C$1.0752, or 93.01 U.S. cents. The currency hit a session high
of C$1.0717, its highest level since early January.
    For the session, the loonie should see its strength capped
at C$1.07 and should see a floor at C$1.0780 around the 200 day
moving average, said Smith. 
    Weak euro zone business activity data prompted investors to
sell the euro, pushing it down to C$1.4595. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year off 1 Canadian cent
to yield 1.135 percent, while the benchmark 10-year 
was up 5 Canadian cents to yield 2.291 percent.

 (Editing by Chizu Nomiyama)
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