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Canadian dollar closes

firm, bond weaker

TORONTO: The Canadian dollar closed firm after a day of light trade on Wednesday with the unit sidelined by other foreign exchange markets.

Canada recovered from early weakness on strong European interest, which is expected to resurface overnight and hold the unit above the key C$1.3600 level.

Dealers said the Canada is in "no man's land" at closing levels thanks to general uncertainty and nervousness in North American asset markets.

Little change forecast overnight, although the longer term outlook remains positive.

"When we saw the Europeans coming in, that suggested to me sentiment is turning", one dealer said. "There might be a small positive on Canada tomorrow but dealers won't have had enough time to refocus on Canada by then".

On the crosses, the Canadian dollar rose to 1.1034 marks from Tuesday's close of 1.1016 marks and rose to 79.89 yen from 79.28 yen.

Canadian bonds closed weaker on Wednesday, following the US bond market lower, ahead of key US inflation data out on Thursday and Friday, analysts said.

"It doesn't look good from here. I think the market is a little apprehensive going into tomorrow's PPI," said Harvinder Kalirai, Canadian analyst with New York-based economic analysis firm I.D.E.A.

Canada's 9.0 percent of 2025 fell C$1.03 to C$107.88 to yield 8.278 percent against the US 30-year benchmark, which fell 1-8/32 to US$88.04 to yield 6.95 percent.

The spread between the benchmark bonds was 133 basis points, unchanged from Tuesday's close. The 30-year spread is now at its narrowest point since May, 1995.

Canadian and US bond investors are looking ahead to the release of key US economic reports including March retail sales and producer price data out on Thursday and consumer price data out on Friday. A stronger-than-expected US payrolls report last Friday prompted a bond market sell-off.

US bonds ended lower on Wednesday, resuming Friday's and Monday's losses on technical weakness and nervousness before tomorrow's data, analysts said.

In other news, Moody's Investors Service has confirmed the Aa2 rating on the Province of Alberta's domestic and foreign currency debt. Canadian Bond Rating Service said it confirmed Canada's long- and short-term debt ratings with a continued stable outlook.

In other prices, the 8.75 percent of 2005 fell C$0.81 to C$105.94 to yield 7.857 percent against the US 10-year which yielded 6.67 percent for a spread of 119 basis points.

At the front end, Canada's three-month cash bill traded at 5.12 percent against the US bill at 5.08 percent.-Reuter