CANADA FX DEBT-Loonie softens to one-week low, but hews to recent range

Fri Jul 25, 2014 9:55am EDT

* Canadian dollar at C$1.0758 or 92.95 U.S. cents
    * Bond prices higher across the maturity curve

    By Leah Schnurr
    TORONTO, July 25 (Reuters) - The Canadian dollar softened to
a one-week low against its U.S. counterpart on Friday, pressured
by stronger-than-expected durable goods data south of the
border, which benefited the greenback.
    The loonie had started to weaken in overnight trading,
tripped up by wide U.S. dollar strength. But with little
domestic economic news this week, the Canadian currency has
largely traded sideways, taking its cues from U.S. data and
vacillating investor sentiment over the crises in Gaza and
Ukraine. 
    The U.S. data showed orders for long-lasting manufactured
goods rose 0.7 percent in June, suggesting some momentum for the
economy. The loonie touched a session low of C$1.0769 after the
report was released, its lowest level in a week and a
half. 
    "There's been a melt up in U.S. dollar-Canadian dollar
looking at it over the last number of days," said Jack Spitz,
managing director of foreign exchange at National Bank Financial
in Toronto. "The lack of domestic data, combined with an overall
bid to the U.S. dollar has contributed to a move higher in U.S.
dollar-Canadian dollar." 
    He added that the Canadian dollar and other commodity
currencies are playing defense for several reasons, "whether
it's central bank guidance or a move lower in commodities, but
the Canadian dollar is following suit with the commodity block."
    The Canadian dollar was at C$1.0758 to the
greenback, or 92.95 U.S. cents, weaker than Thursday's close of
C$1.0745, or 93.07 U.S. cents.
    The loonie was off 0.3 percent for the week so far, with
analysts expecting it to keep treading the same range it has
been in recently in the near term. 
    Still, there will be some potentially market-moving events
next week, including gross domestic product reports on both
sides of the border,  the U.S. unemployment report for June, and
a U.S. Federal Reserve meeting.  
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1 Canadian cent
to yield 1.093 percent and the benchmark 10-year up
21 Canadian cents to yield 2.135 percent.

 (Editing by Peter Galloway)
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