CANADA FX DEBT-C$ softens as Greece, China worries push greenback higher

Mon May 11, 2015 5:12pm EDT
 
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(Adds details, strategist's comment, closing figures)
    * Canadian dollar at C$1.2110 or 82.58 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 11 (Reuters) - The Canadian dollar gave up some
of last week's gains against U.S. dollar on Monday as the
greenback strengthened broadly, while easing prices for crude, a
major Canadian export, kept the loonie under pressure.
    The market also continued to feel the impact of Friday's
U.S. employment data, which showed a rebound in job growth in
April and a lower unemployment rate.
    "The drivers today: it's really U.S. dollar strength, which
was the default bid for nonfarm number on Friday," said Jack
Spitz, managing director of foreign exchange at National Bank
Financial, who added that worries about a Greek exit from the
euro zone were also supporting the greenback.
    Concern over Greece's ability to repay a 750 million euro
loan to the International Monetary Fund and risks it could
default dominated markets on Monday. 
    Also, the Chinese central bank cut interest rates for the
third time in six months over the weekend in an effort to
bolster an economy that was sputtering toward its worst year in
a quarter century. 
    "The overall attraction to the (U.S.) dollar right now is
coming on the back of the uncertainties in China," Spitz said.
    "Canada has been effectively middle of the road. It's
attracting some interest as a North American currency ... but
there's no data this week in Canada that's going to be
influential."
    The Canadian dollar, which was stronger against
nearly all of its other currency counterparts, ended at C$1.2110
to the greenback, or 82.58 U.S. cents, marginally weaker than
the Bank of Canada's official close of C$1.2090, or 82.71 U.S.
cents, on Friday.
    The currency traded between C$1.2065 and C$1.2144 on Monday.
    U.S. crude prices were off 0.25 percent at $59.24,
while Brent crude lost 0.81 percent to $64.86, weighed
down by signs that the commodity's recent rally was fueling a
rejuvenation of already bloated U.S. shale supplies. 
    Canadian government bond prices were mixed across the
maturity curve with longer-term bonds lower. The two-year
 price was down 8.5 Canadian cents to yield 0.706
percent and the benchmark 10-year sank C$1.17 to
match last week's yield of 1.822 percent, the highest level this
year.
    The Canada-U.S. two-year bond spread was 8.6 basis points,
while the 10-year spread was -46.3 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway)