CANADA FX DEBT-C$ eases as greenback rallies post-Fed

Mon Sep 21, 2015 4:27pm EDT
 
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(Rewrites throughout with TD Securities strategist's comment,
closing figures)
    * Canadian dollar at C$1.3245 or 75.50 U.S. cents
    * Bond prices generally lower across the maturity curve

    By Solarina Ho
    TORONTO, Sept 21 (Reuters) - The Canadian dollar softened
against a stronger greenback on Monday as markets parsed through
the implications of the Federal Reserve's rate decision last
week, but the currency outperformed its other counterparts as
the price of U.S. crude surged.
    The U.S. dollar rallied against a basket of major currencies
on expectations the Fed is still on track to raise interest
rates before the end of this year, diverging from views that the
European Central Bank could further ease monetary policy. 
    "Everyone's still digesting the Fed. And I think given the
tone of some of the Fed speakers recently that have been
generally more hawkish, that is pretty much helping to boost the
U.S. dollar," said David Tulk, chief Canada macro strategist at
TD Securities.
    "Canada's sort of caught in the cross fire. Canada's better
on the day versus everyone else ... so that's probably an oil
story. But more generally, it's still one of U.S. dollar
strength."
    The Canadian dollar finished trading at C$1.3245 to
the greenback, or 75.50 U.S. cents, weaker than the Bank of
Canada's official close of C$1.3217, or 75.66 U.S. cents. It
traded between C$1.3176 and C$1.3266 during the session.
    Data that showed U.S. drilling had slowed, helped give the
price of crude oil, a key Canadian export, a lift. U.S. 
prices settled at $46.68 a barrel, up $2.00 or 4.48 percent.
 
    The loonie, which retreated nearly 15 percent this year
alone, has been key to helping the economy adjust to cheap oil
and commodity prices, said Governor Stephen Poloz in a speech on
Monday in Calgary, adding that the Bank of Canada must not stand
in the way.
    In domestic data, the value of Canadian wholesale trade was
unchanged in July as gains in sectors including machinery and
motor vehicles were offset by declines in the food industry.
Economists had forecast a gain of 0.7 percent. In volume terms,
wholesale sales were down 0.4 percent in July. 
    Canadian retail sales for July, due on Wednesday, will be
the primary focus for Canadian data this week. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 11
Canadian cents to yield 0.521 percent and the benchmark 10-year
 falling 74 Canadian cents to yield 1.542 percent.
    The Canada-U.S. two-year bond narrowed to -18.9 basis
points, while the 10-year spread narrowed to -67.9 basis points.

 (Reporting by Solarina Ho; Editing by Nick Zieminski and Grant
McCool)