CANADA FX DEBT-C$ dips modestly as greenback firms, crude slides
(Updates throughout with strategist comment, details, closing figures) * Canadian dollar at C$1.2275, or 81.47 U.S. cents * Bond prices higher across the maturity curve By Solarina Ho TORONTO, June 11 (Reuters) - The Canadian dollar slipped against the greenback on Thursday as a stronger U.S. currency, bolstered by economic data, also dampened the price of oil. The U.S. dollar recouped some of Wednesday's losses against a basket of currencies, buoyed by a bounce in U.S. retail sales in May. Weekly U.S. jobless claims ticked up more than expected, however, but remained at a healthy level. "We're seeing the Canadian dollar back off a little and that has ... more to do with U.S. dollar moves today," said Lennon Sweeting, currency strategist at USForex. Market participants have been focused on U.S. economic data to help guide expectations on when the Federal Reserve might raise rates. Recent numbers have suggested a 2015 rate hike is likely, with September expected. The Canadian dollar was at C$1.2275 to the greenback, or 81.47 U.S. cents, softer than Wednesday's close of C$1.2262, or 81.55 U.S. cents. The currency traded between C$1.2253 and C$1.2355 during the session. "Overall, I do think there is going to be further weakness for the Canadian dollar regardless of crude pricing, or Bank of Canada policy," said Sweeting. "The way the market appears to be trading is it really is circling around the U.S. Fed. I think that's what's really going to dominate volatility." The price of crude, a key Canadian export, snapped its two-day rally amid the stronger U.S. dollar with investors taking profits. U.S. crude settled down 66 cents, or 1 percent, at $60.77, while Brent settled down 59 cents, or about 1 percent, at $65.11 a barrel. Overseas, the New Zealand dollar sank to a five-year low against the greenback after the Reserve Bank of New Zealand surprised markets with an interest rate cut and suggested more easing could follow. Sweeting said this may have potentially added some pressure to the loonie, given the commodity correlation between the two currencies, but said the Canadian economy was performing fairly well, overall. In Canada, industrial capacity use fell in the first quarter from the previous quarter, pulled lower in part by weaker manufacturing, while new home prices in Canada edged up in April, in line with forecasts. Canadian government bond prices rose across the maturity curve, with two-year rising 9.1 Canadian cents to yield 0.658 percent and benchmark 10-year gaining 84 Canadian cents to yield 1.816 percent. The Canada-U.S. two-year bond spread was -5.9 basis points, while the 10-year spread was -56.5 basis points. (Reporting by Solarina Ho; Editing by Meredith Mazzilli and Diane Craft)
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