CANADA FX DEBT-C$ resumes climb after jump in building permits

Mon Jul 7, 2014 9:46am EDT

* Canadian dollar at C$1.0640 or 93.98 U.S. cents
    * Bond prices mostly higher across maturity curve

    By Leah Schnurr
    TORONTO, July 7 (Reuters) - The Canadian dollar strengthened
against the greenback on Monday, resuming its recent climb after
data showed building permits surged far more than expected in
May.
    The bounce put the loonie on strong footing at the start of
a week that features some key Canadian economic data, including
housing starts and the monthly unemployment report.
    The value of Canadian building permits shot up by 13.8
percent in May, the fastest rate since July 2013. Those figures
lifted the Canadian dollar as high as C$1.0632, helping it
reverse much of Friday's sharp drop. 
    "It starts us off with some pretty positive data here in a
sector that people keep expecting to show signs of weakening,"
said Don Mikolich, executive director of foreign exchange sales
at CIBC World Markets in Toronto.
    "While we do look for some second-half slowdown in housing,
clearly that hasn't begun yet."
    Later on Monday, investors will also get reports on
purchasing activity and the Bank of Canada's business outlook
survey.
    The Canadian dollar was at C$1.0640 to the
greenback, or 93.98 U.S. cents, stronger than Friday's close of
C$1.0657, or 93.84 U.S. cents.
    The Canadian dollar is up nearly 3 percent since early June
after a rally in which the currency touched a six-month high
last week. A number of factors have pushed the loonie higher,
including firmer domestic inflation, stronger oil prices and a
better outlook for global growth.
    Investors rushing to cover their Canadian dollar short
positions have exacerbated the upward momentum. 
    Data from the Commodity Futures Trading Commission's weekly
commitments of traders report showed the net Canadian dollar
position has shifted to positive for the first time since
February 2013, highlighting the favorable turn in sentiment
toward the currency, Scotiabank wrote in a note.
    The next support levels for the U.S. dollar-Canadian dollar
pairing could come at C$1.0620 and C$1.0595, Mikolich said.
    "I think (there is) still a little bit of room to move down
but you do continue to hear calls for a stronger U.S. dollar
into the second half," Mikolich said. 
    "So one begins to think we're starting to see some of the
bottom end of what the likely trading range could be, but I
think it's too soon to call that we've seen the bottom yet."
    Canadian government bond prices were mostly higher across
the maturity curve, though the two-year was off 1
Canadian cent to yield 1.143 percent. The benchmark 10-year
 was up 16 Canadian cents to yield 2.313 percent.

 (Editing by Peter Galloway)
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