TORONTO, Nov 15: The Canadian dollar took a break from a week-long surge against a broadly weaker US currency on Friday, despite strong domestic data.

Meanwhile, Canadian bond prices followed US treasuries higher, reversing early weakness spurred by US economic data, as investors were soothed by hopes that US interest rates would stay steady for some time.

The currency closed at C$1.3023 to the US dollar, or 76.79 US cents, off 10-year highs set earlier this week, compared with C$1.2995, or 76.95 US cents, at Thursday’s close.

I think we’re just seeing a modest correction today. I don’t think anybody believes this story is finished yet. It looks like the US dollar has further to fall, said Doug Porter, senior economist at BMO Nesbitt Burns.

Shipments from Canada’s factories jumped 5.2 per cent in September on the highest rise in orders in the past year, and marking a recovery from the August power blackout, Statistics Canada said on Friday.

But analysts said the currency was ignoring the strong data, as traders took profits after the Canadian dollar’s 3 per cent rise this week.

The domestic currency has risen sharply since last Friday on surprisingly strong economic data which greatly reduced prospects of a Bank of Canada rate cut at its next rate-setting session in December.

Canadian Finance Minister John Manley, who has voiced concern about the speed of the Canadian dollar’s rise, said on Friday that interest rates could fall if the currency’s rise cuts into growth, echoing comments by Bank of Canada Deputy Governor David Longworth on Thursday.

I think it’s awfully hard to make the case for a rate cut in December, but if there’s any kind of stumble at all in the economy over the next couple of months, it’s still a reasonable debate given how strong the currency is. There is still an outside chance that the bank could cut rates again, said Porter.—Reuters