CANADA FX DEBT-C$ weaker as sharp dip in oil price hurts currency

Fri Sep 18, 2015 4:54pm EDT
 
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(Adds comment, updates prices)
    * Canadian dollar ends at C$1.3217, or 75.66 U.S. cents
    * Bond prices higher across the maturity curve

    By Alastair Sharp
    TORONTO, Sept 18 (Reuters) - The Canadian dollar weakened
versus the U.S. dollar on Friday, with the commodity currency
hurt by a sharp drop in the price of crude oil a day after the
U.S. Federal Reserve decided to hold interest rates at near zero
amid global uncertainty.
    The Canadian currency ended the North American
session changing hands at C$1.3217 to the greenback, or 75.66
U.S. cents, weaker than the Bank of Canada's official Thursday
close of C$1.3174, or 75.91 U.S. cents.
    It had been as strong as C$1.3013 at one point, but gave up
gains steadily throughout the session as oil fell. It gained 0.3
percent on the week.
    "The Canadian dollar has taken its tone from the directional
bias in crude oil today, which is unambiguously lower," said
Jack Spitz, managing director of foreign exchange at National
Bank Financial. 
    U.S. crude prices fell 4.1 percent to $44.99 a
barrel, while Brent crude lost 2.7 percent to $47.76.
 
    In Canada, the government reported inflation held steady in
August, in line with expectations. 
    "I think you need a pretty significant deviation (in
inflation) to have it have a large impact on the currency, given
that we're still working through the fallout from yesterday's
(U.S. Federal Reserve) meeting," said Andrew Kelvin, senior
rates strategist at Toronto-Dominion Bank.
    The Canadian dollar outperformed most of its currency
counterparts, though not its commodity-related cousins the
Australian and New Zealand dollars.
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 4 Canadian
cents to yield 0.460 percent and the benchmark 10-year
 jumping 65 Canadian cents to yield 1.462 percent.
    The Canada-U.S. two-year bond spread was -21.8 basis points,
while the 10-year spread was -67.2 basis points.

 (Reporting by Alastair Sharp; Editing by W Simon and Grant
McCool)