CANADA FX DEBT-C$ extends losses to near six-year lows post-Fed

Thu Jan 29, 2015 10:26am EST
 
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* Canadian dollar at C$1.2575 or 79.52 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Jan 29 (Reuters) - The Canadian dollar was trading
at levels not seen in nearly six years against its U.S.
counterpart on Thursday, extending losses from the previous
session after the Federal Reserve maintained its view that U.S.
interest rates could rise this year. 
     Diverging monetary policies between the Fed and the Bank of
Canada, highlighted by last week's shock rate cut in Canada and
the Fed's upbeat outlook on Wednesday, have firmly pushed the
Canadian dollar onto a weaker path. Markets are currently
pricing in about a 57 percent probability of another interest
rate cut by the Bank of Canada in March. 
    "These factors suggest the Canadian dollar is unlikely to
recover any significant strength anytime soon," said Shaun
Osborne, chief currency strategist at TD Securities.
    The Canadian dollar was trading at C$1.2575 to the
greenback, or 79.52 U.S. cents, weaker than Wednesday's close of
C$1.2520, or 79.87 U.S. cents. This was its weakest intraday
level since April 2, 2009. 
    Market participants will be looking to a slew of data from
the United States and economic growth data for November in
Canada on Friday for further direction. 
    Osborne expects the currency to close somewhere near C$1.26
or a little above that level by the end of the week.
    Canadian government bond prices were mixed across the
maturity curve, with the longer-term securities lower. The
two-year was down 3 Canadian cents to yield 0.450
percent and the benchmark 10-year was off 14
Canadian cents to yield 1.367 percent.

 (Reporting by Solarina Ho; Editing by Meredith Mazzilli)