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CANADA FX DEBT-C$ ends higher, bonds seesaw with US data

Published 09/29/2009, 05:07 PM
Updated 09/29/2009, 05:09 PM

* Canadian dollar inches up to 92.12 U.S. cents

* Bonds little changed after U.S. data a wash

* Canadian GDP on tap for Wednesday (Updates to close)

TORONTO, Sept 29 (Reuters) - The Canadian dollar finished slightly higher versus the U.S. currency on Tuesday, but remained in its recent trading range as economic data failed to push it strongly either way.

With no major Canadian economic data on tap until Wednesday, currency and bond markets looked to Tuesday's slate of U.S. figures for direction.

The S&P/Case-Shiller report showed U.S. single-family home prices rose in July from the previous month, surpassing forecasts and bolstering the case for housing market stability after a three-year plunge. [ID:nNYS005445]

Meanwhile, the Conference Board's index on U.S. consumer confidence slipped to 53.1 in September. Economists had expected an improvement to 57.0 from an upwardly revised 54.5 in August. [ID:nNYS005447]

Neither report prompted a major reaction, nor did a report that showed consumer confidence in Canada improved for a seventh straight month in September. [ID:nN29135851]

"The market is rather complacent and there's no real direction for the next extended move," said John Curran, senior vice president at CanadianForex, a commercial foreign exchange dealing firm.

The Canadian dollar finished at C$1.0855 to the U.S. dollar, or 92.12 U.S. cents, up slightly from C$1.0875 to the U.S. dollar, or 91.95 U.S. cents, at Monday's close.

"Realistically, we're range-bound in the Canadian dollar between C$1.06 and C$1.11," Curran said. "People are looking for real evidence to send us one way or another. Until then, we're pretty much range-bound."

A slight weakening in the oil price [O/R] and moderate firmness in Canadian equity markets seemed to leave the Canadian dollar in neutral on Tuesday. Equity and energy markets often sway the direction of the currency as they are seen as barometers of risk appetite.

DATA A WASH FOR BONDS

Canadian bonds felt early downward pressure from the U.S. housing data but recouped nearly all their losses after the U.S. consumer confidence report.

"The flow of data that we had from the U.S. was almost perfectly offsetting. The pleasant surprise on home prices was almost exactly offset by the nasty surprise on consumer confidence," said Doug Porter, deputy chief economist at BMO Capital Markets.

The week is fairly data-heavy in the United States, with jobless claims, regional surveys such as the Chicago PMI, and personal income data still to come. It will be capped off with the September U.S. jobs figures, the latest read on whether the U.S. economic recovery is taking hold.

In Canada, the only notable release this week is on Wednesday when the gross domestic product report for July is expected to show the third quarter began positively, supporting views that the economy is slowly emerging from recession. Economists, on average, expect the economy to have grown 0.4 percent in July.

The two-year bond dipped 1 Canadian cent to C$99.47 to yield 1.281 percent, while the 10-year bond fell 3 Canadian cents to C$103.40 to yield 3.335 percent. The 30-year bond dropped 10 Canadian cents to C$119.15 to yield 3.866 percent.

Separately IFR, a Thomson Reuters service, reported that the province of Ontario sold $2 billion in 10-year notes, priced 73 basis points over U.S. Treasuries. [ID:nN29155031] (Reporting by Ka Yan Ng; editing by Peter Galloway)

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