CANADA FX DEBT-C$ firms, bouncing off technical resistance

Tue Aug 26, 2014 9:30pm BST

* Canadian dollar at C$1.0952 or 91.31 U.S. cents
    * Bond prices mixed across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Aug 26 (Reuters) - The Canadian dollar firmed
against the greenback on Tuesday, recovering from a nearly
four-month low hit in the overnight session as a dearth of
domestic economic data left the loonie drifting.
    The low had brought the currency within a hair of the
psychologically important C$1.10 level, which investors see as a
key resistance threshold.
    Mixed U.S. economic data, higher oil prices and better risk
appetite as investors hoped for a cooling of tensions between
Ukraine and Russia all also helped support the loonie, said    
Scott Smith, senior market analyst at Cambridge Mercantile Group
in Calgary.
    "We have a bit of consolidation and not very much
follow-through up to the C$1.10 figure," said Smith. "We
probably won't see a lot of direction over the course of the
week or a catalyst to really push us one way or the other."
    The Canadian dollar ended the North American
session at C$1.0952 to the greenback, or 91.31 U.S. cents,
stronger than Monday's close of C$1.0981, or 91.07 U.S. cents. 
    The loonie hit a low of C$1.0998 in overnight trading. The
last time the currency pairing was higher than C$1.10 was in
early May.
    The failure to pierce that level is not very encouraging for
the U.S. dollar-Canadian dollar bulls from a technical
perspective, said Camilla Sutton, chief currency strategist at
Scotiabank in Toronto.
    "The more important piece is it likely only takes a small
piece of broad U.S. dollar strength to drive U.S.
dollar-Canadian higher through that very important C$1.10,"
Sutton said.
    "I suspect U.S. dollar-Canadian dollar actually proves very
comfortable on either side of that level."
    There is little on the economic calendar for Canada this
week until gross domestic product figures are released on
Friday. The Canadian economy slowed in the first three months of
the year, partly due to a severe winter, and economists are
looking for a bounce back in the second quarter. 
    The market is also focused on the possible path of monetary
policy ahead of an upcoming Bank of Canada interest rate
decision and following comments from Governor Stephen Poloz at
last week's conference in Jackson Hole, Wyoming.
    Poloz said the central bank will not necessarily immediately
follow the United States when the Fed starts hiking rates, the
Globe and Mail reported. The Bank of Canada will release its
next policy statement on Sept. 3.
    "It's just reassuring markets that the Bank of Canada is
still very neutral in terms of the direction of monetary policy
and we're likely to see that in the statement next week," 
Cambridge Mercantile Group's Smith said.
    Canadian government bond prices were mixed across the
maturity curve, though the two-year was off 3
Canadian cents to yield 1.105 percent. The benchmark 10-year
 was up 3 Canadian cents to yield 2.040 percent.

 (Editing by Grant McCool)
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