Canada’s dollar heads higher in range trade

TORONTO (Reuters) – Canada’s dollar pulled off a small gain against the U.S. dollar Monday despite being hemmed into a fairly tight range by a lack of economic data and softer resource prices.

Canadian government bond prices were mixed, in line with their U.S. counterparts.

Market sentiment overall was hurt by Standard & Poor’s decision on Monday to cut its debt rating for Greece by three notches to junk territory, saying the country is increasingly likely to restructure its debt in a way the ratings agency would consider a default.

The Canadian dollar traded between C$0.9752 and C$0.9799, tighter than last week’s range of C$0.9711 and C$0.9803. Its lowest level during North American trading hours, C$0.9796, corresponded with a dive in the Toronto stock market’s main index to a six-month low.

“It’s rangebound. I think we’re just consolidating a little bit after Friday’s losses,” said David Tulk, chief Canada macro strategist at TD Securities.

The Canadian dollar was undercut on Friday by soft commodities and a flight to safety after hitting its highest level since June 1 on a better than expected domestic employment report.

Commodity prices offered little catalyst for Canadian dollar movement on Monday. Prices for oil — one of Canada’s major exports — dropped more than 2 percent.

Camilla Sutton, chief currency strategist at Scotia Capital, said global economic data, such as Chinese CPI, would likely be a big driver for the currency market this week due to the scarcity of Canadian figures.

The major Canadian data, manufacturing shipments data for April, due Wednesday, is expected to be weak due to supply chain disruptions from the Japan earthquake.

The Canadian dollar finished at C$0.9768 to the U.S. dollar, or $1.0238, up from Friday’s North American close of C$0.9783 to the U.S. dollar , or $1.0222.

The two-year bond was down 3 Canadian cents to yield 1.465 percent, while the 10-year bond rose 8 Canadian cents to yield 3.001 percent. (Reporting by Ka Yan Ng; editing by Peter Galloway)