CANADA FX DEBT-C$ edges lower on crude oil slide, dip in PMI

Thu Nov 5, 2015 4:49pm EST
 
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(Adds comment, Fed and trade deal detail; updates prices)
    * Canadian dollar at C$1.3168 or 75.94 U.S. cents
    * Bond prices dip across the maturity curve

    By Fergal Smith
    Nov 5 (Reuters) - The Canadian dollar edged lower on
Thursday against a firm U.S. dollar, contending with further
fall-out for crude oil and slippage in the Ivey PMI, but moved
in a tight range as attention turned to U.S. and Canadian
employment data on Friday.
    The Canadian dollar closed at C$1.3168 against the
U.S. dollar, or 75.94 U.S. cents, slightly weaker than
Wednesday's close of C$1.3157, or 76.01 U.S. cents, but holding
above Wednesday's low at C$1.3192.
    The market is "effectively covering positions ahead of the
payroll numbers," said Jack Spitz, managing director of foreign
exchange at National Bank Financial.
    Hawkish comments from Federal Reserve officials underpinned
the U.S. dollar. Atlanta Fed President Dennis Lockhart said the
Fed in its last policy statement was deliberately trying to
convince investors of a possible December interest rate hike,
and was successful in doing so. 
    U.S. crude settled at $45.20 a barrel, down 2.4
percent, pressured by oversupply after hitting a one-week low at
$45.12, and Brent crude fell 1 percent to $48.09. 
    The Ivey Purchasing Managers Index slowed slightly in
October. The seasonally adjusted index edged down to 53.1 from
53.7 in September, short of analysts' expectations for 54.0. A
reading above 50 indicates an increase in the pace of activity.
 
    Spitz said the Canadian dollar is likely more vulnerable to
weaken further "in the event that the U.S. produces
better-than-expected payrolls," which would make a December rate
hike more likely.      
    Canadian government bond prices edged lower across the
curve, extending recent losses. The two-year price
dipped 1 Canadian cent to yield 0.630 percent, having made a new
four-month high at 0.632 percent, and the benchmark 10-year
 fell 16 Canadian cents to yield 1.652 percent,
having also made a fresh multi-month high at 1.666 percent.
    Spreads versus U.S. Treasuries were slightly less negative,
with the 2-year spread at -21.2 basis points and the 10-year at
-58.5.
    Canada's newly installed trade minister said the government
would seek public input on the terms of the Trans-Pacific
Partnership trade deal which were released on Thursday and
revealed that regulatory scrutiny of foreign takeovers of
Canadian companies would ease if the deal is ratified.
 
    Canadian data due on Friday is expected to show a rise of
10,000 jobs in October after a 12,100 gain in September,
according to a Reuters poll.

 (Reporting by Fergal Smith; Editing by W Simon and James
Dalgleish)