CANADA FX DEBT-C$ eases as U.S. crude slips, traders trim positions

Fri Apr 24, 2015 5:06pm EDT
 
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* Canadian dollar at C$1.2170 or 82.17 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, April 24 (Reuters) - The Canadian dollar retreated
against the U.S. dollar on Friday,  as weaker U.S. crude oil
prices weighed and short-term speculators exiting their
positions head of the weekend.
    U.S. oil prices diverged from Brent prices on Friday,
falling more than 1 percent on worries of another increase in
crude stockpiles next week, even as overall demand appeared to
be picking up ahead of summer. Crude, a key Canadian export,
gained on the week, however, with U.S. prices rising some 2.5
percent.
    Short-term currency speculators, many of whom are
London-based, were also unloading their positions. This added to
the Canadian currency's retreat, which began Friday morning,
during the North American session.
    "That was exactly when we saw the move; it's the classic
'London go home' period," said Greg Anderson, global head of
foreign exchange strategy with BMO Capital Markets in New York.
    "I think that group would probably be somewhat inclined to
come back in and buy CAD and sell USD on Monday, unless oil
prices fall substantially further."
    The Canadian dollar finished at C$1.2170 to the
greenback, or 82.17 U.S. cents, weaker than the Bank of Canada's
official Thursday close of C$1.2146, or 82.33 U.S. cents.
    The currency, which traded between $1.2103 and C$1.2182 on
Friday, was also weaker against all of its other major
counterparts. It was about half a percent stronger on the week.
    The currency's strength earlier in the session was helped by
a generally softer U.S. dollar. The greenback, already pressured
by weak new home sales data for March, a rise in U.S. jobless
claims and subdued factory activity earlier this week, wilted
against a basket of currencies on Friday.
    U.S. durable goods orders in March, which painted a mixed
picture of sluggish growth and could prompt the Federal Reserve
to hold off hiking interest rates, added to the greenback's
weakness. 
    A Federal Reserve meeting next week will be a key market
driver as investors await clues on when the U.S. central bank
will begin hiking rates. Speculation of a June move has already
shifted towards September due to the spate of lukewarm U.S.
economic data from the first quarter.
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 4 Canadian
cents to yield 0.632 percent and the benchmark 10-year
 rising 39 Canadian cents to yield 1.442 percent.
    The Canada-U.S. two-year bond spread was 12.4 basis points,
while the 10-year spread was -47.0.

 (Reporting by Solarina Ho; Editing by Nick Zieminski and James
Dalgleish)