CANADA FX DEBT-C$ slips against greenback despite Swiss move
* Canadian dollar at C$1.1964 to greenback, or 83.58 U.S. cents * Bond prices higher across the maturity curve By Alastair Sharp TORONTO, Jan 15 (Reuters) - The Canadian dollar weakened slightly against its U.S. counterpart on Thursday, a slip offset by the Swiss central bank's shock withdrawal of a cap on the safe-haven franc. That set off frenzied trading across currency and other markets, and obscured dismal domestic housing data and negative sentiment about retailer Target's decision to exit Canada. "All else being equal, today would have been a poor day for the Canadian dollar, but all wasn't equal. Today was an historic day in the foreign exchange market," said Adam Button, a currency analyst at ForexLive in Montreal. The Canadian dollar traced back early gains, however, and ended the session at C$1.1964 to the greenback, or 83.58 U.S. cents, weaker than Wednesday's close of C$1.1945, or 83.72 U.S. cents. The Swiss move, which sent the franc soaring, initially boosted commodities 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." ForexLive's Button said the next risk for the loonie, as Canada's currency is colloquially known, would be if the Bank of Canada uses its quarterly monetary policy report next week to raise the prospect of cutting interest rates amid slumping crude prices. "If the Bank of Canada hints at a dovish bias, it will send the market into a frenzy" that could put he C$1.25-1.30 range in play, he said. 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 15 Canadian cents to yield 0.812 percent and the benchmark 10-year was up C$1 to yield 1.465 percent, a record low. (Editing by Nick Zieminski and Grant McCool)
© Thomson Reuters 2016 All rights reserved.