CANADA FX DEBT-C$ dips, US dollar firms on ECB, jobless claims data

Thu Nov 6, 2014 9:48am EST
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* Canadian dollar at C$1.1415, or 87.60 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Nov 6 (Reuters) - The Canadian dollar weakened
Thursday against the greenback, which strengthened on positive
U.S. jobless claims data and comments by the European Central
Bank president saying the bank was ready to take more measures
to stave off a deflation risk.
    In Canada, data showed the value of building permits beat
expectations, jumping 12.7 percent in September and recovering
some of the previous month's drop, but the impact of the
positive data on the currency was overshadowed by external
    Euro zone inflation remains far below the central bank's
target of just under 2 percent, underscoring the difficulty of
meeting the ECB's target in a stagnating economy.
    ECB President Mario Draghi, playing down the extent of
discord on the governing council, insisted he had unanimous
agreement behind his monthly statement on the potential future
size of the ECB's balance sheet and the possibility of more
measures to fight deflation.
    In the United States, the number of Americans filing new
claims for unemployment benefits fell more than expected last
week. The data comes on the heels of another report on Wednesday
that showed U.S. private employers created 230,000 jobs last
month, the most since June and exceeding forecasts.
    "Those have been the two main drivers even though building
permits out of Canada were better than expected. That has been
put to the back burner and the main focus has been (U.S.)
jobless claims and Mario Draghi," said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary.
    "(Draghi's comments) put a lot of downward pressure on the
euro, which by extension has boosted the American dollar."
    The Canadian dollar, which touched a five-year low
in the previous session before rebounding, was trading at
C$1.1415 to the greenback, or 87.60 U.S. cents, weaker than
Wednesday's close of C$1.1389, or 87.80 U.S. cents.
    Smith said market participants were also positioning
themselves on expectations that the U.S. non-farm payroll
figures due on Friday will be robust.
    "If that happens we'll again see the U.S. dollar on its
front foot," Smith said.
    Canada's monthly jobs data is also due on Friday.
    Also hurting the commodities-linked Canadian dollar was U.S.
crude prices, which gave back earlier gains to fall below $78 a
    Canadian government bond prices were mixed across the
maturity curve, with the two-year flat with a yield
of 1.005 percent and the benchmark 10-year down 10
Canadian cents with a yield pf 2.062 percent.

 (Editing by Bernadette Baum)