CANADA FX DEBT-C$ stronger as broad US$ selloff overshadows Poloz

Thu Jun 6, 2013 1:41pm EDT
 
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* C$ at C$1.0230 vs US$, or 97.75 U.S. cents
    * Comments from Draghi, Poloz grab attention
    * U.S. dollar falls hard vs yen

    By Alastair Sharp and Cameron French
    TORONTO, June 6 (Reuters) - The Canadian dollar gained
against its U.S. counterpart on Thursday, as broad selling of
the U.S. dollar overshadowed the impact of strong Canadian
economic data as well as the first public appearance by the new
Bank of Canada governor.
    The loonie, as the currency is colloquially known, rose to
its highest level in nearly three weeks as U.S. dollar selling
accelerated near the close of the European trading session.
    "It's really an across the board selloff of U.S. dollars,
with the catalyst being a break of technical support of
dollar/yen," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.    
    Earlier U.S. dollar weakness was triggered by the European
Central Bank ruling out cutting its overnight deposit rate below
zero for now. 
    Just after midday the Canadian dollar was trading
at C$1.0230 to the greenback, or 97.75 U.S. cents, compared with
C$1.0346, or 96.66 U.S. cents, at Wednesday's North American
close.
    The U.S. dollar-led activity overshadowed comments by new
Bank of Canada Governor Stephen Poloz, who stressed that
Canadian rates would one day rise from rock-bottom levels but
said there was no evidence that current low rates were posing
excessive risks. 
    "It's fairly neutral overall, but if anything I would say it
errs on the side of being less dovish than anyone expected,"
said Camilla Sutton, chief currency strategist at Scotiabank,
referring to Poloz's two hours of testimony to parliament.
    Economic data also gave support to the loonie, as the pace
of purchasing activity in Canada jumped higher than expected in
May, according to Ivey Purchasing Managers Index
data. 
    Meanwhile, reports this week suggesting slower hiring by
U.S. firms in May hurt the greenback as it raised the risk that
Friday's non-farm payrolls could disappoint, and lessen the
likelihood that the Federal Reserve will taper its easing
program early.
    Canada will also report monthly jobs data for May on Friday.
 
    The price of Canadian government debt was mixed across the
curve, with the two-year bond up half a Canadian cent
to yield 1.050 percent, while the benchmark 10-year bond
 slipped 3 Canadian cents to yield 2.049 percent.