CANADA FX DEBT-C$ weakens as Canadian factory sales slump

Fri Jun 14, 2013 7:20pm IST

* C$ at C$1.0177 vs US$ or 98.26
    * Canadian factory sales fall 2.4 pct in April from March
    * Bond prices rise across curve

    By Solarina Ho
    TORONTO, June 14 (Reuters) - The Canadian dollar weakened
against the U.S. dollar on Friday after data showed Canadian
factory sales sank unexpectedly in April from March, plunging
2.4 percent. 
    The fall was the fourth in five months and the biggest drop
since August 2009. Analysts had expected a 0.3 percent increase.
 
    "It does suggest that activity may have been weaker in April
than expected and it does put GDP on path maybe to be somewhere
in the flat to plus 0.1 neighborhood," said Benjamin Reitzes,
senior economist and foreign exchange strategist at BMO Capital
Markets.
    "Getting beyond that would probably be pretty difficult
given the weak manufacturing number."
    The Canadian dollar, which was mixed against other
major currencies, was at C$1.0177 to the U.S. dollar, or 98.26
U.S. cents, at 9:18 a.m. (1318 GMT). That was weaker than its
level just before the numbers were released, and down from
Thursday's finish of C$1.0166, or 98.37 U.S. cents.
    "The strength in the Canadian data of late - the good
housing, the good unemployment - have really provided decent
support for Canadian dollar," Reitzes said. "Going forward, I'm
not convinced the Canadian dollar's going to be able to hang in
here." 
    He added that BMO expects the currency to trade between
C$1.0209-C$1.0109 on Friday.
    Many strategists said this week they expect the Canadian
dollar weaken further, in views similar to the findings of a
recent Reuters poll. 
    The next big market driver could come when U.S. Federal
Reserve Chairman Ben Bernanke speaks next week. Market watchers
will be parsing the language he uses for hints on when the U.S.
central bank might begin scaling back its stimulus measures.
    Government bond prices rose across the curve, with the
two-year bond up 3 Canadian cents to yield 1.110
percent, and the benchmark 10-year bond up 25
Canadian cents to yield 2.110 percent.