C$ trades little changed after touching 2-1/2-month high

By Andrea Hopkins

TORONTO (Reuters) - The Canadian dollar was little changed on Thursday after briefly touching its strongest level in more than two months, building on a steady appreciation towards parity with its U.S. counterpart ahead of Friday's key domestic jobs report.

Global stock markets held near multi-year highs as relatively upbeat economic data and ongoing support from central banks help buoy investor sentiment, though currency moves were mostly subdued.

"Most currencies, with the exception of Australia and New Zealand, are very close to where they closed yesterday. Markets are pretty quiet, we haven't had a ton of news flow, and we're really just digesting the host of second-tier but important central bank meetings and commentaries this week," said Camilla Sutton, chief currency strategist at Scotiabank.

The Australian and New Zealand dollars bounced higher following stellar labor reports in both countries, paring back the risk of a June rate cut in Australia and reinforcing the outlook for steady to higher New Zealand rates.

The Canadian dollar continued its slow-and-steady appreciation against the U.S. greenback, inching towards parity. The currency has gained some 2-1/2 cents on the U.S. dollar since late April.

At 9:24 a.m. EDT (1324 GMT) the Canadian dollar was at C$1.0029, or 99.71 U.S. cents, slightly stronger than Wednesday's North American session close at C$1.0033, or 99.67 U.S. cents.

Overnight the currency hit C$1.0014 to the greenback, its strongest level since February 15, and Sutton said the Canadian dollar could test parity.

"Momentum seems fairly strong. When we look at CAD on the chart most technical studies suggest CAD is appreciating. Every day we seem to be reaching, in dollar-Canada (terms), lower lows and lower highs," she said.

"Parity and C$0.9989, which is the 200-day average, are the key levels."

Over the longer term, the Canadian dollar is expected to weaken against the greenback in the year ahead, according to a Reuters poll published on Wednesday. Forecasters cited concern about the economy's slow rate of growth compared with that of the United States.

Sutton said all eyes will be on the Canadian employment report due out on Friday, which is expected to show the Canadian economy added 15,000 jobs in April after a steep decline notched in March, according to a Reuters survey of analysts.

"Those that had factored in a very weak domestic outlook have had to question that over the last month as data has improved. Tomorrow's employment number is probably more important than it typically is," Sutton said.

Prices for Canadian government bonds were mixed. The two-year bond rose 0.2 Canadian cent to yield 0.975 percent, while the benchmark 10-year bond fell 2 Canadian cents to yield 1.814 percent.

(Editing by Jeffrey Hodgson and Chris Reese)

Source: http://news.yahoo.com/c-trades-little-changed-touching-2-1-2-135703366.html

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