CANADA FX DEBT-C$ nears 2009 low as oil, greenback fall
(Updates throughout with strategist comment, final currency levels) * Canadian dollar at C$1.3039 or 76.69 U.S. cents * Bond prices mostly higher across the maturity curve By Solarina Ho TORONTO, July 23 (Reuters) - The Canadian dollar ended little changed against its U.S. counterpart on Thursday as pressure from U.S. crude prices, which slid below $49 a barrel on supply and demand worries, were offset by a weaker U.S. dollar. The loonie received a brief boost from stronger-than-expected Canadian retail sales data, but was quickly overshadowed by a surprisingly steep fall in weekly U.S. jobless claims that helped the U.S. dollar pare earlier losses. "Today's data on retail sales is a little bit better, but it's also rear-view looking. You saw how short-lived the move was," said Amo Sahota, director at Klarity FX in San Francisco. "The U.S. jobless claims took the shine off." A drop in U.S. Treasury yields to two-week lows on growing Wall Street losses and deflation worries from falling commodity prices kept the greenback under pressure, which fell about half a percent against a basket of key currencies. The Canadian dollar finished at C$1.3039 to the greenback, or 76.69 U.S. cents, firmer than the Bank of Canada's official close of C$1.3037, or 76.70 U.S. cents on Wednesday. The loonie moved between C$1.2946 and C$1.3047 during the session, trading just shy of C$1.3066, its weakest level since March 2009. Once it breaks through that level, the currency will be trading at levels not seen since 2004. "It's still part of a broader commodity/currency fallout here...with oil below $50 a barrel, that's going to keep pressure on the loonie still. Nothing's materially changed since that (25 basis point rate cut) Bank of Canada announcement," said Sahota. U.S. crude fell 74 cents to settle at $48.45 a barrel, the lowest settlement since March 31. Oil is a major Canadian export. The U.S. claims data, the lowest since 1973, was the latest indicator that the U.S. economy may be ready for a rate hike by the Federal Reserve. Markets may be biding their time ahead of next week's monetary policy decision due on Wednesday, when the Fed is expected to provide clearer guidance on when it will resume raising rates. Many economists and strategists are currently betting on September hike. Canadian government bond prices were mostly higher across the maturity curve, with the two-year price up 0.5 Canadian cent to yield 0.429 percent and the benchmark 10-year up 36 Canadian cents to yield 1.501 percent. The Canada-U.S. two-year bond spread was minus 26.9 basis points, while the 10-year spread was a differential of 77 basis points. (Reporting by Solarina Ho; Editing by Peter Galloway and Diane Craft)
© Thomson Reuters 2017 All rights reserved.