CANADA FX DEBT-C$ stabilizes, but posts worst month since January

Thu Jul 31, 2014 4:35pm EDT

* Canadian dollar at C$1.0904 or 91.71 U.S. cents
    * Bond prices mostly higher across the maturity curve

 (Recasts throughout; adds quotes, details, updates prices)
    By Leah Schnurr
    TORONTO, July 31 (Reuters) - The Canadian dollar was little
changed against the greenback on Thursday, pulling back from a
more than seven-week low hit earlier in the day, though the
loonie still suffered its worst month since January.
    The day's trade offered a small respite for the currency,
which has declined sharply in three of the last five sessions as
it has been hurt by a wave of support for the U.S. dollar on
optimism that the recovery south of the border is picking up
steam.
    Data that showed a better-than-expected pace of growth for
the Canadian economy in May gave some support to the loonie,
while the currency was likely also influenced by month-end
positioning by investors, said Adam Button, currency analyst at
ForexLive in Montréal.
    Canada's economy grew by 0.4 percent in May, the fifth
monthly increase in a row and topping expectations for 0.3
percent growth. 
    "Looking through the details, there was broad-based strength
in services, manufacturing, a lot of the industries that could
continue to sustain solid growth in Canada," said Button.
    The Canadian dollar ended the North American
session at C$1.0904 to the greenback, or 91.71 U.S. cents, a tad
weaker than Wednesday's close of C$1.0901, or 91.73 U.S. cents.
    The loonie was down 2.1 percent for July, its first monthly
decline since January, when the currency was hit by a steep
selloff.
    Most analysts still expect the loonie has further to fall,
with many looking for it to hit C$1.10 in the coming months.
    The Canadian dollar's recent drop through a series of key
resistance points has added to its downward momentum, making for
a 1.4 percent decline since last Friday.
    "There's very little technically to support the Canadian
dollar here," said Button. "A one-day bounce on a tough day in
the market is nice, but it won't change anyone's opinion of the
Canadian dollar."
    Canadian government bond prices were mostly higher across
the maturity curve, with the two-year up 1-1/2
Canadian cents to yield 1.099 percent, but the benchmark 10-year
 was off 2 Canadian cents to yield 2.166 percent.

 (Editing by G Crosse)
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