CANADA FX DEBT-C$ rallies as greenback falters, oil rises

Mon Aug 10, 2015 5:00pm EDT
 
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* Canadian dollar at C$1.3001 or 76.92 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, Aug 10 (Reuters) - The Canadian dollar logged its
biggest one-day gain against the greenback since early June on
Monday, reversing early losses as the price of crude oil, a
major Canadian export, rallied and the U.S. dollar slumped
against a basket of key currencies.
    Optimism that China, one of the world's biggest resource
consumers, will take action to stimulate its economy following
another round of disappointing data bolstered global market
sentiment, helping the loonie. 
    Its jump took some of the sting out of recent losses that
had pulled the Canadian dollar to its weakest levels since 2004.
The currency retreated on Friday after strong U.S. and weak
Canadian labor reports for July did nothing to alter the two
countries' divergent monetary policy paths.
    "A little bit of U.S. dollar weakness, a little bit of oil
strength, a bit of China optimism ... those are the usual
suspects whenever you see a Canadian dollar move," said Adam
Button, currency analyst at ForexLive in Montreal.
    The Canadian dollar ended the session at C$1.3001
to the greenback, or 76.92 U.S. cents, more than 1 percent
firmer than the Bank of Canada's close at C$1.3133, or 76.14
U.S. cents on Friday.
    At one point, the currency touched C$1.2991, or 76.98 U.S.
cents, its strongest level since the end of July.
    The greenback fell against the euro and other major
currencies as optimism about the global economy pushed traders
with longstanding bullish bets on the U.S. dollar to pare their
positions. 
    The weakness also came as markets, reacting to comments by
Federal Reserve officials on Monday, were less certain about the
central bank's longer-term rate hike intentions, Button said.
    "How many more times will the Fed hike is the big question,"
he said.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year price down 5
Canadian cents to yield 0.464 percent and the benchmark 10-year
 falling 51 Canadian cents to yield 1.474 percent.
    The Canada-U.S. two-year bond spread narrowed to -26.5 basis
points, while the 10-year spread widened to -75.7 basis points.

 (Reporting by Solarina Ho Editing by W Simon and Peter
Galloway)