CANADA FX DEBT-C$ weaker as oil falls, risk aversion picks up

Mon Jun 13, 2016 5:20pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Adds strategist comment, updates prices to close)
    * Canadian dollar at C$1.2807, or 78.08 U.S. cents
    * Bond prices higher across the maturity curve

    By Alastair Sharp
    TORONTO, June 13 (Reuters) - The Canadian dollar weakened to
a nearly one-week low against its U.S. counterpart on Monday as
oil eased and risk appetite deteriorated amid fears that Britons
may vote to leave the European Union.
    The Canadian currency settled at C$1.2807 to the
greenback, or 78.08 U.S. cents, weaker than Friday's close of
C$1.2757, or 78.39 U.S. cents.
    Shaun Osborne, chief currency strategist at Bank of Nova
Scotia, said he expects the loonie to depreciate to between
C$1.33 and C$1.35 against the greenback in the next three
    "I can see some challenges for Canada over the next little
while," he said. "With the Fed in play, it's going to be a
challenge for the Canadian dollar to really pick up any
substantial ground over the balance of the year."
    Osborne said that view included an assumption that crude may
have peaked for now and could ease back toward the low $40s per
    Oil prices were weighed downward by the stronger U.S. dollar
and gloomy economic prospects in Europe and Asia. U.S. crude
 prices settled down 0.4 percent at $48.88 a barrel. 
    Global stocks sold off on Monday, adding to headwinds for
the risk-sensitive and commodity-linked Canadian dollar, after
betting odds showed the probability that Britain would vote to
leave the EU had increased sharply to 36 percent, the highest
level since the June 23 referendum was announced four months
    The Canadian currency's strongest level of the session was
C$1.2750, while it touched its weakest level since June 7 at
    Last week, the loonie gained 1.4 percent as expectations
fell for interest rate hikes from the U.S. Federal Reserve and
as oil posted fresh 2016 highs above $50.
    Data on Friday showed that Canada added far more jobs than
expected in May as hiring picked up in the construction and
manufacturing sectors. 
    Speculators have cut bullish bets on the loonie, Commodity
Futures Trading Commission data showed on Friday. Net long
Canadian dollar positions fell to 21,537 contracts in the week
ended June 7 from 26,259 contracts in the prior week, which was
the largest net long position since February 2013. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year price up 2.5
Canadian cents to yield 0.488 percent and the benchmark 10-year
 climbing 19 Canadian cents to yield 1.112 percent.
The 10-year yield hit its lowest level since Feb. 24 at 1.107

 (Reporting by Fergal Smith, editing by G Crosse)