CANADA FX DEBT-C$ firms but oil price, jobs worry cut into early gain

Thu Mar 12, 2015 4:39pm EDT
 
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(Updates with fresh comment, closing figures, details)
    * Canadian dollar at C$1.2703 or 78.72 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, March 12 (Reuters) - The Canadian dollar closed
stronger against the greenback on Thursday but lower crude
prices and market anticipation of a weak Canadian employment
report for February on Friday cost it most of its early gains.
    The price of oil, a major Canadian export, fell on forecasts
for another big supply build, with U.S. crude settling down 2.3
percent at $47.05 a barrel, and Brent finishing nearly 1 percent
lower at $57.08. 
    "We saw crude sell off aggressively, after being up, so that
puts pressure on Canada," said David Bradley, director of
foreign exchange trading at Scotiabank.
    "Heading into tomorrow's employment data as well, I think
the markets are expecting that we might get a soft number.
Anyone who's short USD/CAD is probably covering those positions
as well."
    The Canadian dollar closed at C$1.2703 against the
U.S. dollar, or 78.72 U.S. cents, about half a cent stronger
than Wednesday's finish at C$1.2761, or 78.36 U.S. cents. It
touched as high as C$1.2613, or 79.28 U.S. cents, earlier in the
session.
    The U.S. dollar index, which measures the greenback against
six major currencies, touched its highest level in nearly 12
years overnight on anticipation the U.S. Federal Reserve will
hike interest rates sometime in the coming months, but it
softened ahead of the unexpectedly weak retail sales data on
Thursday and sold off further immediately after.
    "(The U.S. dollar has) gained a lot of momentum in the last
couple of weeks. We've taken a little bit of a breather from
that," said Mark Chandler, head of Canadian fixed income and
currency strategy at RBC Capital Markets.
    The drop in U.S. retail sales in February was fairly
broad-based, suggesting poor winter weather kept shoppers away,
and could hurt economic growth in the first quarter.
    
    Domestically, there was a slew of lower-tier economic data.
    Canada's household debt-to-income ratio rose to a record
high in the final quarter of 2014, while prices for new homes
fell for the first time in nearly five years in January. Figures
for home resales in February showed a correction underway in
several markets with prices scratching out just a slight gain
nationally. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 1.5 Canadian
cents to yield 0.574 percent and the benchmark 10-year
 rising 10 Canadian cents to yield 1.492 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)