CANADA FX DEBT-C$ little changed, caught in 'tug of war' of data

Thu Jul 24, 2014 9:58am EDT

* Canadian dollar at C$1.0734 or 93.16 U.S. cents
    * Bond prices lower across the maturity curve

    By Leah Schnurr
    TORONTO, July 24 (Reuters) - The Canadian dollar was little
changed against the greenback on Thursday as encouraging global
purchasing activity data was offset by robust jobs data south of
the border that supported the U.S. dollar to the detriment of
the loonie.
    In a quiet week for domestic economic data, there were few
catalysts to take the currency strongly in either direction and
analysts expect the Canadian dollar will continue to tread its
recent range.
    Data showed China's factory activity expanded at its fastest
in 18 months in July, while the euro zone's private sector
picked up. The reports together suggested the global economy
started the second half of the year on solid footing.
 
    But that was tempered by a separate report that showed the
number of Americans filing new claims for unemployment benefits
fell last week to the lowest since early 2006. That pressured
the loonie as it underscored speculation the Federal Reserve
could raise interest rates sooner than had been expected.
 
    Fed Chair Janet Yellen said last week that the U.S. central
bank could raise rates sooner and more rapidly than currently
anticipated if the labor market continued to improve faster than
expected by policymakers.
    "The loonie is in a bit of a tug of war this morning," said 
   Scott Smith, senior market analyst at Cambridge Mercantile
Group in Calgary.
    "We've got a couple opposing factors affecting the loonie,
which has kept it hemmed right around the unchanged mark for
now."
    The Canadian dollar was at C$1.0734 to the
greenback, or 93.16 U.S. cents, slightly weaker than Wednesday's
close of C$1.0729, or 93.21 U.S. cents.
    While the loonie is nearly flat for the week so far, the
currency will see more potential drivers next week with gross
domestic product reports on both sides of the border, as well as
the U.S. unemployment report and a Federal Reserve meeting. 
    "We don't have too many catalysts until next week to try to
get a sense of a better view point going forward," said Smith.
    The currency pairing should find support at C$1.07, while
the high C$1.07s to C$1.08 area will likely act as resistance
unless U.S. economic data continues to come in strong, said
Smith.
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 2.2 Canadian
cents to yield 1.094 percent and the benchmark 10-year
 down 26 Canadian cents to yield 2.162 percent.

 (Editing by James Dalgleish)
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