960416

Dollar steady,

bonds higher

in Toronto

TORONTO: The Canadian dollar closed steady in very quiet dealing on Monday, but market players anticipate it will break out of its narrow range of trading this week, analysts said.

The dollar closed steady at C$1.3556 (US$0.7377), basically unchanged from Monday's open of C$1.3550 (US$0.7380).

Reid Farrill, CIBC foreign exchange specialist, said the currency is likely to reach firmer ground, supported by a stronger US dollar and signs that Canada is becoming more fiscally sound.

However, Technical Data analyst Krystian Cieplucha said that the unit is likely to weaken this week, based on information gathered about negative sentiment readings and hedging and speculation positions on the Chicago Mercantile Exchange. "We're looking for a technical reversal signal," he said.

Market volatility is close to yearly lows, he noted.

Cieplucha forecast that the currency would remain trapped in the range of C$1.3540-C$1.3570 in overnight trading. On the crosses, Canada rose to 1.1152 marks from Friday's close of 1.1084 marks and was flat at 80.02 yen from 80.01 yen.

Canadian bonds ended stronger in skimpy trading on Monday, outperforming the US market on the heels of Friday's rally, analysts said.

"Trading was thin and dull but the result was higher bond prices", said Jeoff Hall, a Technical Data analyst in a daily report. "The interest has been much more aggressive in the US but Canada continues to outperform even on bullish days".

Canada's 9.0 percent of 2025 jumped C$0.36 to C$109.26 to yield 8.161 percent against the US 30-year benchmark, which rose 6/32 to yield 6.79 percent.

The spread between the benchmark bonds narrowed to 137 basis points from 140 at Friday's close.

On Tuesday, Canada's federal government will release the results of its weekly bond auction. It will auction C$6.6 billion of three-, six- and 12-month treasury bills but will cut down on new cash, withdrawing a total of C$1.6 billion from the market.

Investors will watch Tuesday's US data, which includes industrial production and capacity utilisation for March.

In other prices, the 8.75 percent of 2005 slid C$0.40 to C$107.40 to yield 7.647 percent against the US 10-year which yielded 6.52 percent for a spread of 118 basis points.

In the front end, the three-month cash bill was trading at 4.96 percent against the US three-month at 5.00 percent.