CANADA FX DEBT-C$ firms, shadowing higher oil prices

Thu Feb 5, 2015 9:55am EST
 
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* Canadian dollar at C$1.2496 or 80.03 U.S. cents
    * Bond prices mostly weaker across the maturity curve

    By Solarina Ho
    TORONTO, Feb 5 (Reuters) - The Canadian dollar strengthened
against the greenback on Thursday as crude prices rebounded from
the previous session's plunge and remained the currency's
primary mover.
    "The better oil prices have been the main reason for the
Canadian dollar to appreciate," said Charles St-Arnaud, senior
economist and strategist at Nomura Securities in London.
    The market was also digesting data that showed Canada's
trade deficit in December was significantly smaller than had
been expected by analysts. Still, it nearly doubled to C$649
million, hurt by cheap prices for crude, a major Canadian
export.
    St-Arnaud noted a rebound in non-energy exports, a key area
of focus for the Bank of Canada, but said exports declined
during the fourth quarter in volume terms, while imports
increased. 
    "Mathematically, it means you'll have a drag on growth
coming from exports in Q4 and quite a substantial one,"
St-Arnaud said.
    At 9:33 a.m. (1433 GMT), the Canadian dollar was at
C$1.2496 to the greenback, or 80.03 U.S. cents, stronger than
Wednesday's close of C$1.2565, 79.59 U.S. cents.
    Investors will next focus on January employment reports from
the United States and Canada on Friday. Forecasters predict
4,500 new jobs added in Canada. 
    Canadian government bond prices were mixed, but mostly
weaker across the maturity curve, with the two-year 
down 4 Canadian cents to yield 0.415 percent and the benchmark
10-year off 42 Canadian cents to yield 1.310
percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)