CANADA FX DEBT-C$ recovers with crude oil after factory data miss

Mon Nov 16, 2015 4:33pm EST
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(Adds strategist comment, updates prices)
    * Canadian dollar closes at C$1.3325 or 75.05 U.S. cents
    * Bond prices mixed across the maturity curve

    By Alastair Sharp
    TORONTO, Nov 16 (Reuters) - The Canadian dollar rode a
bounce in the price of crude oil on Monday, recovering from its
weakest level in more than six weeks after a surprise tumble in
domestic manufacturing. 
    The loonie, as Canada's currency is colloquially known, had
weakened against the greenback following the Paris attacks on
Friday and as domestic factory sales fell to their lowest level
since May, before paring those losses to settle flat on the day.
    The factory data surprised investors who had expected a
cheaper loonie to have boosted manufacturers. 
    "The big picture is the manufacturing sector looks like it
needs even more weakness in the Canadian dollar longer-term,"
said Darcy Browne, managing director of foreign exchange sales
at CIBC World Markets.
    The Canadian dollar settled at C$1.3325 to the
greenback, or 75.05 U.S. cents, slightly weaker than the
official close on Friday of C$1.3318, or 75.09 U.S. cents.
    At one point it touched C$1.3372, its weakest level since
Sept. 30, but also saw renewed buying interest around the
C$1.3350-60 level.
    "There seems to be longer-term players willing to establish
hedges around that level for the time being," Browne said.    
    Canadian manufacturing sales fell by 1.5 percent in
September, hurt by lower motor vehicle assembly and oil product
sales, according to Statistics Canada data. Analysts surveyed by
Reuters had forecast a 0.1 percent rise. 
    Crude oil rose after strong losses last week, as the Paris
attacks raised the prospect of heightened geopolitical tensions
that could threaten global supply. 
    U.S. crude prices settled up 2.45 percent to $41.95,
while Brent crude added 0.8 percent to $44.83.
    Statistics Canada also reported that foreign investors
bought C$3.35 billion in Canadian securities in September,
mainly due to the resumption of the purchase of Canadian shares
after two months of divestment.         
    The weak Canadian dollar offers an opportunity for exporters
but also makes it harder for companies to buy machinery to
upgrade their operations, new Finance Minister Bill Morneau said
on Sunday, speaking on the margins of the Group of 20 summit in
    Canada's new Liberal Prime Minister Justin Trudeau met
China's top leader on Monday, seeking to revive political ties
and boost trade to help energize a faltering economy.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year flat to yield 0.611
percent and the benchmark 10-year rising 5 Canadian
cents to yield 1.647 percent. The three-year issue slipped.

 (Additional reporting by Fergal Smith; Editing by Meredith
Mazzilli and Phil Berlowitz)