CANADA FX DEBT-C$ gains in aftermath of Swiss central bank move

Thu Jan 15, 2015 9:54am EST
 
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* Canadian dollar at C$1.1925 to greenback, or 83.86 U.S.
cents
    * Bond prices higher across the maturity curve

    By Alastair Sharp
    TORONTO, Jan 15 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday as the commodity-linked
currency benefited from the Swiss central bank's shock
withdrawal of a cap on the safe-haven franc.
    The move, which sent the franc soaring, boosted commodities
from crude oil to gold and prompted traders to scale back bets
on a further rise in the value of the greenback. 
    "The Swiss National Bank's move to effectively drop their
defense of the 1.20 euro/Swiss floor has created volatility,
which in turn is creating an environment that causes short crude
to come back, short commodity prices to come back," said Jack
Spitz, managing director of foreign exchange at National Bank
Financial.
    "The (U.S.) dollar is faltering marginally, commodity
currencies are rising as commodity short positions are being
squared," he said. "The Canadian dollar has rallied on the back
of this."
    The Canadian dollar was at C$1.1925 to the
greenback, or 83.86 U.S. cents by 9:30 a.m. (1430 GMT), stronger
than Wednesday's close of C$1.1945, or 83.72 U.S. cents.
    The loonie, as Canada's currency is colloquially known, has
weakened significantly in recent months as the price of crude
oil has plunged. 
    Spitz said none of the fundamentals affecting the loonie had
changed with the Swiss news, and that any further gains would be
tied to a sustained rebound in crude prices. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.5 Canadian
cents to yield 0.874 percent and the benchmark 10-year
 was up 15 Canadian cents to yield 1.559 percent.

 (Editing by Nick Zieminski)