CANADA FX DEBT-Housing data helps C$ bounce back from last week's selloff

Reuters

* Canadian dollar at C$1.0919 or 91.58 U.S. cents * Bond prices lower across the maturity curve (Adds details, quotes, updates prices) By Leah Schnurr TORONTO, Aug 11 (Reuters) - The Canadian dollar firmed against the greenback on Monday after data showed domestic housing starts rose unexpectedly in July, helping the loonie recover from a selloff late last week.

The report showed housing starts rose to 200,098 last month, above forecasts for 193,000. In what is a relatively light week for domestic economic figures, that data helped put the loonie on solid footing in morning trading and the currency picked up momentum through the day.

At the same time, risk appetite in broader markets sharpened as investors were less worried about an escalation in world geopolitical tensions.

"Overall, it's just positive risk sentiment that's driven the Canadian dollar higher, supported by the fact that we had some positive housing starts numbers that came out this morning," said Rahim Madhavji, president at KnightsbridgeFX.com in Toronto.

Still, the housing starts report is not generally a major driver of the Canadian dollar, Madhavji said.

"At the end of the day, this piece of data is not going to be a major catalyst for the loonie for the rest of the week, or going forward," he said.

The Canadian dollar ended the North American session at C$1.0919 to the greenback, or 91.58 U.S. cents, stronger than Friday's close of C$1.0971, or 91.15 U.S. cents.

The lack of domestic data this week could leave the loonie vulnerable to international events, as well as to the U.S. data that is on tap, which could push the currency pairing to C$1.10 if it comes in strong, said Don Mikolich, executive director of foreign exchange sales at CIBC World Markets in Toronto.

The Canadian dollar sold off on Friday, sending it into the high C$1.09s after the release of a disappointing Canadian jobs report for July, which showed growth in the labor market staying sluggish.

"The fact that the Canadian dollar has held in to where we are right now in light of those employment numbers suggests there is still some underlying demand for being long Canada," Mikolich said.

Canadian government bond prices were lower across the maturity curve, with the two-year off half a Canadian cent to yield 1.062 percent, and the benchmark 10-year down 1 Canadian cent to yield 2.073 percent.

(Editing by Peter Galloway)

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