CANADA FX DEBT-C$ strengthens as oil, risk-on appetite supports

Thu Oct 22, 2015 4:26pm EDT
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* Canadian dollar strengthens to C$1.3107, or 76.30 U.S.
    * Bond prices rise across the curve

 (Adds details, quote, updates prices)
    By Andrea Hopkins
    TORONTO, Oct 22 (Reuters) - The Canadian dollar strengthened
slightly against its U.S. counterpart on Thursday, regaining
some ground after Wednesday's drop, as firmer oil prices and a
dovish European Central Bank supported risk appetite.
    Stocks rose in the United States and Europe and the dollar
hit a three-week high against the euro after ECB President Mario
Draghi said further rate cuts were considered to stimulate the
euro zone economy. 
    "The day's move was some give back from the previous
session's hefty decline and was supported by a stabilization in
oil prices and better-than-expected Canadian retail sales," said
Don Mikolich, executive director of foreign exchange sales at
CIBC World Markets.  
    Retail sales rose more than expected in August, climbing for
the fourth month in a row as sales at motor vehicle and parts
dealers increased, data from Statistics Canada showed on
Thursday. Retail sales rose by 0.5 percent, topping economists'
expectations for a gain of 0.1 percent.  
    The Canadian dollar ended the North American
session at C$1.3107 to the greenback, or 76.30 U.S. cents,
stronger than Wednesday's close of C$1.3137, or 76.12 U.S.
    The Canadian dollar had weakened more than 1 percent - to
its lowest since Oct. 5 - on Wednesday after the Bank of Canada
lowered its growth forecasts for 2016 and 2017, underscoring
expectations the central bank is a long way off from raising
interest rates.   
    "We had a bit of a risk-on appetite that's been occurring
and a lot that has helped equities and, at the margins, that
tends to help the commodities currencies," said Mark Chandler,
head of Canadian fixed income and currency strategy at Royal
Bank of Canada. 
    Chandler said he expects to see more weakness from the
Canadian dollar as Canada's economy continues to underperform
the U.S. recovery.
    "Even though we did okay on a relative basis, given that the
Bank is being cautious here and that U.S. data is still
relatively firm, I suspect that we'll lose ground to the U.S.
dollar going forward," he said.
    Canadian government bond prices rose across the maturity
curve, with the two-year up 2 Canadian cents to yield
0.525 percent and the benchmark 10-year up 12
Canadian cents to yield 1.447 percent.

 (Additional reporting by Leah Schnurr in Ottawa; Editing by
Chris Reese)