Forex Market News - Canadian dollar ends slide with small gain
Thu Apr 10, 2008 5:14pm EDT
By Frank Pingue
TORONTO, April 10 (Reuters) - The Canadian dollar ended a
four-session skid with a slight gain against the U.S. dollar on
Thursday, but upbeat trade data and comments from the Bank of
Canada could not lift the currency out of its range.
Bond prices gave back early gains to finish the session
lower across the curve as investors extended their recent
charge back into equity markets.
The Canadian dollar closed at C$1.0188 to the U.S. dollar,
or 98.15 U.S. cents, up from C$1.0190 to the U.S. dollar, or
98.14 U.S. cents, at Wednesday's close.
Data released early in the session showed Canada's trade
surplus soared 78 percent in February, and while that helped to
reduce some of the near-term fears for the economy it was not
enough to trigger a significant move by the currency.
Instead, the Canadian dollar spent the session in a range
of C$1.0225, or 97.80 U.S. cents, and C$1.0163, or 98.40 U.S.
cents, as investors were uneasy holding the currency at the
lower end of the session range.
"We're just stuck in a range-trading scenario and it has
caused people to reduce their focus on the Canadian dollar and
follow and trade other currencies," said George Davis, chief
technical strategist at RBC Capital Markets.
"It's made people a little tentative to get aggressively
long dollar/Canada right now and as a result people are just
stepping back for the time being."
Conditions seemed ideal for the Canadian dollar to break
out of its range as commodity prices remained near lofty
levels, equity markets rallied and domestic data was strong.
But slow economic growth has spawned fears of a recession
in the United States, which has hampered the currency's
performance because the Canadian economy relies on the United
States as a market for the bulk of its exports.
A speech Bank of Canada Deputy Governor David Longworth
also had no noticeable impact on the currency as he said the
central bank would continue to monitor the effect of unusually
tight credit conditions while setting its monetary policy.
Longworth's speech marked the last public appearance by a
Bank of Canada official ahead of its next interest rate
announcement on April 22.
"The comments ... I don't think provided the market with
any significant new information, so as a result there wasn't a
significant reaction," said Davis.
BONDS END DOWN
Bond prices followed the bigger U.S. market higher early in
the session, as data showed the U.S. trade deficit widened
unexpectedly, but they ended lower across the curve as stock
markets lured investors out of more secure assets.
"You did start the day off with a rally and it was driven
by the soft U.S. trade numbers, and Canada took part in that
even though our own trade numbers were rather healthy," said
Eric Lascelles, chief economics and rates strategist at TD
"Since then, there has been a complete reversal, bonds have
sold off, the curve is flattening and the motivation for that
seems to be the traditional stock market strength story."
The last piece of Canadian data due this week will be
February's new housing price index, due out on Friday.
The two-year bond fell 11 Canadian cents to C$102.07 to
yield 2.745 percent. The 10-year bond dropped 48 Canadian cents
to C$102.92 to yield 3.621 percent.
The yield spread between the two- and 10-year bonds was
87.6 basis points, up from 86.2 basis points at the previous
The 30-year bond slipped 93 Canadian cents to C$115.15 to
yield 4.103 percent. In the United States, the 30-year treasury
yielded 4.349 percent.
The three-month when-issued T-bill yielded 2.35 percent, up
from 2.31 percent at the previous close.
Reuters journalists are subject to the Reuters Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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