CANADA FX DEBT-C$ rallies, but awaiting Friday's key jobs data

Mon May 4, 2015 4:36pm EDT
 
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(Updates with fresh details, strategist comment, and closing
figures)
    * Canadian dollar at C$1.2092 or 82.70 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 4 (Reuters) - The Canadian dollar rallied more
than half a cent against its U.S. counterpart and also
strengthened against other major currencies on Monday as crude
prices continued to trend higher.
    Still, the Canadian dollar traded within recent ranges, as
market participants awaited key employment data from both the
United States and Canada, due on Friday.
    Brent crude touched a 2015 high earlier in the session prior
to retreating, while U.S. crude ended just shy of $59 a barrel.
The price of oil, a significant Canadian export, slipped as
Saudi Arabia's plan to halt bombing in Yemen eased tensions over
the security of Middle East supplies, but overall prices were
still well off the multi-year lows hit in earlier this
year. 
    "Generally speaking, if oil prices keep churning higher,
than that should potentially offer a little bit more support for
cad," said Greg Moore, senior currency strategist at RBC Capital
Markets.
    The Canadian dollar finished at 1.2092 to the
greenback, or 82.70 U.S. cents, stronger than the Bank of
Canada's official close of C$1.2157, or 82.26 U.S. cents on
Friday. The loonie traded between C$1.2090 and C$1.2180 during
the session.
    Overall market activity was subdued due to the UK's May bank
holiday. The market was expected to remain somewhat sidelined
ahead of Friday's dual job reports for April.  
    "Given the overall themes we expect from both those reports,
it appears as though ... the risk is to the up side for
USD/CAD," said Moore, noting that RBC's forecasts for the U.S.
are even more optimistic than the bullish consensus of 225,000
new jobs created.
    In Canada, economists are forecasting a soft report. The
April figures will be the first major economic data point for
the second quarter and strategists will be looking to see if the
numbers support the Bank of Canada's view that the economy will
begin rebounding this quarter after being hit hard by plunging
crude prices in the first quarter.
    Canadian government bond prices were mixed across the
maturity curve, with the longer-term bonds falling. The two-year
 price was off half a Canadian cent to yield 0.712
percent and the benchmark 10-year slid 57 Canadian
cents to yield 1.718 percent.
    The Canada-U.S. two-year bond spread was 10.9 basis points,
while the 10-year spread was -42.4 basis points.

 (Reporting by Solarina Ho; Editing by Meredith Mazzilli)