Wednesday February 13, 2008 - 21:53:30 GMT
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Reuters - www.reuters.com
Forex Market News - Canada dollar rebounds to close above par with US$
By Frank Pingue
TORONTO, Feb 13 (Reuters) - The Canadian dollar rose
against the U.S. dollar on Wednesday and closed above parity
for the first time this week as data soothed concerns about a
recession in the United States, but the currency spent the day
in a narrow range.
Domestic bond prices finished mostly flat as many investors
stuck close to the sidelines given the lack of any key data to
lure them out of their positions.
The Canadian dollar closed at US$1.0030, valuing a U.S.
dollar at 99.70 Canadian cents, up from 99.90 U.S. cents,
valuing a greenback at C$1.0010, at Tuesday's close.
The currency bounced around in a tight range given the
support of commodity prices and higher equity markets, and the
weight of nagging global economic concerns.
"It's a correlation argument between rising equities and
stable commodities set against the backdrop of global economic
cycle uncertainty," said Jack Spitz, director of foreign
exchange at National Bank Financial.
"And when you throw that all into the mix and stir it all
up, it seems to be net neutral for the Canadian dollar."
An unexpected rise in U.S. retail sales helped lift the
Canadian dollar to an early session high of US$1.0035 as it
offered hope that the economy of Canada's biggest trading
partner could steer clear of a recession.
But the domestic currency reversed the gains and fell as
low as 99.86 U.S. cents before clawing back in the last half of
the session to finish just shy of its session high.
For the Canadian dollar to break out of its current range,
Spitz suggested it will take a sharp sustained move higher by
equity markets and economic data pointing in the same
The Canadian dollar could get some direction on Thursday as
December trade data for Canada will be released and looked over
closely for any signs that the economy is starting to falter
given the U.S. economic slowdown.
U.S. international trade data is also due on Thursday.
The Canadian dollar has been stuck in a tight range for the
past few weeks, hovering on either side of parity with the U.S.
BONDS LITTLE CHANGED
Canadian bond prices finished higher on the short end of
the curve but trickled lower on the long end, mostly following
the bigger U.S. Treasury market given the lack of any domestic
data for dealers to consider.
"We are some some distance now from a major release ... so
you have to wait several days now to get anything really of
note," said Eric Lascelles, chief economics and rates
strategist at TD Securities.
"I think people are probably reasonably pleased with where
they are positioned and they are just going to sit on it until
compelling evidence comes out and persuades them otherwise."
U.S. retail sales unexpectedly rose 0.3 percent in January,
due in part to stronger sales of new cars and gasoline. The
increase followed a 0.4 percent drop in December and topped
Wall Street forecasts for a 0.2 percent decline.
The two-year bond rose 1 Canadian cent to C$102.01 to yield
3.086 percent. The 10-year bond slid 21 Canadian cents to
C$100.97 to yield 3.874 percent.
The yield spread between the two- and 10-year bond was 78.8
basis points, up from 75.4 basis points at the previous close.
The 30-year bond dropped 77 Canadian cents to C$112.48 to
yield 4.250 percent. In the United States, the 30-year Treasury
yielded 4.534 percent.
The three-month when-issued T-bill yielded 3.26 percent, up
from 3.25 percent at the previous close.
(Editing by Rob Wilson)
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