CANADA FX DEBT-C$ pares losses against firmer greenback as oil rallies

Mon May 30, 2016 4:43pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Adds analyst quote, details on upcoming data; updates prices)
    * Canadian dollar at C$1.3051, or 76.62 U.S. cents
    * Bond prices mixed across flatter maturity curve

    By Fergal Smith
    TORONTO, May 30 (Reuters) - The Canadian dollar dipped
against its broadly stronger U.S. counterpart on Monday as
investors braced for a potential increase in U.S. interest rates
this summer, but some losses were pared as oil turned higher.
    The greenback strengthened against a basket of major
currencies after Federal Reserve Chair Janet Yellen said on
Friday that a rate increase in the coming months "would be
appropriate" if the economy and labor market continued to
improve. 
    The market has been "leaning" toward long U.S. dollar
positions after Yellen's hawkish remarks, said David Bradley,
director of foreign exchange trading at Scotiabank, who noted
that trading was exceptionally light due to the U.S. holiday.
    Oil prices edged up toward $50 a barrel, although
uncertainty ahead of a meeting on Thursday of the Organization
of the Petroleum Exporting Countries was expected to cap gains,
while Canadian production was set to restart after huge
wildfires. 
    U.S. crude futures rose 27 cents to $49.60.    
    The Canadian dollar ended at C$1.3051 to the
greenback, or 76.62 U.S. cents, slightly weaker than Friday's
close of C$1.3038, or 76.70 U.S. cents.
    The currency's strongest level of the session was C$1.3025,
while its weakest was C$1.3095.
    Last week, the loonie touched a seven-week low of C$1.3188. 
  
    Speculators only modestly reduced bullish bets on the
Canadian dollar despite recent wildfires in Alberta and hawkish
comments from Fed officials, Commodity Futures Trading
Commission data showed on Friday. 
    Statistics Canada released domestic data which had little
market impact.
    Canada's current account deficit widened to C$16.77 billion
($12.90 billion) in the first quarter from C$15.71 billion in
the previous three months, while producer prices fell 0.5
percent in April.  
    Canadian government bond prices were mixed across a slightly
flatter maturity curve, with the two-year price down
0.5 Canadian cent to yield 0.652 percent and the benchmark
10-year rising 5 Canadian cents to yield 1.353
percent.
    Canada's gross domestic product data for the first quarter
is awaited on Tuesday. Economic growth is expected to have
picked up to a 2.9 percent annualized rate, rebounding from a
weak fourth quarter as the country continues to grapple with the
shock of cheaper oil. 
    But growth is forecast to have dipped for the second
straight month in March, reinforcing the view that the economy
cooled heading into the second quarter. 

 (Reporting by Fergal Smith; editing by Nick Zieminski and Alan
Crosby)