CANADA FX DEBT-C$ touches 1-week low as U.S. data boosts greenback

Tue Aug 19, 2014 4:21pm EDT

* Canadian dollar at C$1.0943, or 91.38 U.S. cents
    * Bond prices mostly lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Aug 19 (Reuters) - The Canadian dollar weakened
against the greenback on Tuesday to its lowest level in a week
as encouraging economic data south of the border prompted
investors to pick up the U.S. currency, to the detriment of the
loonie.
    Despite some sizeable day-to-day swings, the loonie has
mostly moved sideways since the end of July. While analysts
expect the currency could consolidate around the C$1.09 level
for now, it is seen weakening further before long, partly due to
an improving U.S. economy.
    Data on Tuesday supported that view as housing starts and
building permits surged in July, while consumer prices rose only
modestly. The reports gave the U.S. dollar a 0.4 percent boost
against a basket of currencies. 
    Some profit-taking from long Canadian dollar investors
helped accelerate the initial move lower, said Gareth Sylvester,
director at Klarity FX in San Francisco.
    "The size of the moves have been significant on an intraday
basis, but taking a step back, we haven't broken through any key
trend-defining levels at this stage," Sylvester said.
    "We'd need to see a close above the C$1.0960 area to really
open up the pair for a test toward C$1.1030."
    The Canadian dollar ended the North American
session at C$1.0943 to the greenback, or 91.38 U.S. cents,
weaker than Monday's close of C$1.0886, or 91.86 U.S. cents.
    The loonie saw little benefit from renewed risk appetite in
other financial markets as concerns over geopolitical tensions
between Ukraine and Russia eased. 
    "The market is very comfortable with the geopolitical risks
out there right now, they seem to have been pushed to the back
burner," said Sylvester.
    The next economic catalyst for the Canadian dollar does not
come until Friday, when reports on inflation and retail sales
will be released. Investors will also be watching for any
monetary policy news that comes out of the annual gathering of
central bankers and economists in Jackson Hole, Wyoming, at the
end of the week.
    Canadian government bond prices were mostly lower across the
maturity curve, though the two-year was unchanged to
yield 1.073 percent. The benchmark 10-year was off 8
Canadian cents to yield 2.074 percent.

 (Editing by Meredith Mazzilli)
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