CANADA FX DEBT-C$ weakens but unshaken from its recent range

Thu Jul 24, 2014 4:20pm EDT

* Canadian dollar at C$1.0745 or 93.07 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, July 24 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday as robust jobs data south of
the border supported the U.S. dollar to the detriment of the
loonie, eclipsing encouraging global purchasing activity
figures. 
    Still, the Canadian dollar remained hemmed in to its recent
trading range in a quiet week for domestic economic data that
has provided few catalysts to take the currency strongly in
either direction.
    "It's part of just bouncing around in this range that we're
becoming quite familiar with over the last week," said Ken
Wills, currency strategist and broker at CanadianForex in
Toronto.
    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 offset 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 raised expectations for another strong U.S.
employment report next week. 
    It also underscored speculation the Federal Reserve could
raise interest rates sooner than had been expected following
comments from Fed Chair Janet Yellen last week.
    "The market in my opinion gets a little ahead of themselves
in that regard, thinking the Fed's going to be painted into a
corner and have to do something," said Wills.
    "It may lead to a bit more serious change in tone in the
fall, but I wouldn't expect to see it yet."
    The Canadian dollar ended the North American
session at C$1.0745 to the greenback, or 93.07 U.S. cents,
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 Fed 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    
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    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 3 Canadian
cents to yield 1.098 percent and the benchmark 10-year
 down 24 Canadian cents to yield 2.160 percent.

 (Editing by Chris Reese)
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