* C$ slips to 97.40 U.S. cents
* Bond prices lower, eye on GDP next week
(Updates to close)
TORONTO, March 26 (Reuters) - Canada's dollar eased against
the U.S. currency on Friday, unable to join in the euro's gains
after policymakers agreed on an aid package for debt-ridden
Euro zone leaders made the agreement on Thursday after
weeks of wrangling to try to restore confidence in their common
The Canadian dollar ended at C$1.0267 to the U.S. dollar,
or 97.40 U.S. cents, down from Thursday's finish at C$1.0248 to
the U.S. dollar, or 97.58 U.S. cents.
"It really didn't benefit from a fairly marked snapback in
the euro today," said Doug Porter, deputy chief economist at
BMO Capital Markets.
One analyst said the euro's rally may have prompted some
traders to close out short positions they had on the euro
against the Canadian dollar.
The euro gained broadly on the Greece accord, and got an
extra lift when Bank of Greece Governor George Provopoulos told
reporters the country is not likely to make use of the EU-IMF
financial aid facility. [ID:nATH005316] [FRX/]
"The way I've been saying since the start of this year, is
the Aussie and (Canadian dollar) have been the top twosome and
sterling and euro have been the gruesome twosome. Now we're
getting the euro coming back a little bit so it's not
surprising to see Aussie and Cad losing a bit of the froth,"
said David Watt, senior currency strategist at RBC Capital
While economic fundamentals still generally favor the
Canadian dollar, it seems external forces have stalled the
currency's run earlier this month to test parity with the
"The fever seems to have broke about a week ago. The
currency is clearly cooling its jets for the time being. It
looks like it's going to be a little while before it takes
another run at parity," said Porter.
Next week's market focus will be on Canada's GDP report for
January, as well as the U.S. nonfarm payrolls report.
Bond prices were down slightly across the curve, chipping
lower during the week on firming views that the Bank of Canada
will raise rates later this year.
"The underlying story there is a flatter curve but a
bearish flattener where we're going to see rates grind higher
across the curve," said Porter.
The two-year government bond <CA2YT=RR> slipped 3 Canadian
cents to C$99.63 to yield 1.699 percent, while the 10-year bond
<CA10YT=RR> fell 16 Canadian cents to C$101.49 to yield 3.558
Canadian bonds underperformed their U.S. counterparts. The
difference between 10-year yields narrowed 5.4 basis points to
28.8 basis points.
(Reporting by Ka Yan Ng; Editing by Jeffrey Hodgson)