CANADA FX DEBT-C$ ends winning streak; pares losses as oil rises

Wed Aug 17, 2016 5:09pm EDT
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(Adds analyst quotes, details on Fed minutes, updates prices)
    * Canadian dollar ends at C$1.2856, or 77.78 U.S. cents
    * Bond prices mixed across the maturity curve

    By Fergal Smith
    TORONTO, Aug 17 (Reuters) - The Canadian dollar's nearly
two-week winning streak against its U.S. counterpart ended on
Wednesday, but losses for the currency were pared after the
release of minutes from the Federal Reserve's July meeting and
as oil turned higher.
    The U.S. dollar erased early gains and U.S. bond
yields fell after the Fed minutes showed general agreement that
more data was needed before the next rate increase from the U.S.
central bank.    
    "The price action just tells you that the (bond) market was
short going into the Fed minutes," said Richard Gilhooly, head
of rates strategy at CIBC Capital Markets.
    The Fed is moving closer to raising rates after employment
data since its last policy meeting has been strong, Gilhooly
added. The July employment report was the second straight month
of strong U.S. jobs data. 
    Oil rose for a fifth straight day, helped by a weaker U.S.
dollar and an unexpected drawdown in U.S. crude and gasoline.
U.S. crude oil futures settled 21 cents higher at $46.79
a barrel. 
    The Canadian dollar ended at C$1.2856 to the
greenback, or 77.78 U.S. cents, slightly weaker than Tuesday's
close of C$1.2853, or 77.80 U.S. cents.
    The currency's strongest level of the session was C$1.2831,
while its weakest was C$1.2919.
    On Tuesday, the loonie touched its strongest since June 24
at C$1.2798 as domestic data showed a rebound in factory sales.
 The currency last fell on Aug. 5.
    Still, weak U.S. business investment has hampered a
long-awaited pick-up in growth of Canada's non-energy exports,
economists say, while a weaker Canadian dollar has not helped
exports as much as expected. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price down 1
Canadian cent to yield 0.572 percent and the benchmark 10-year
 rising 12 Canadian cents to yield 1.052 percent.
    The Canada-U.S. two-year bond spread was 2.1 basis points
narrower at -15.8 basis points as Treasuries outperformed.
    Canadian retail sales for June and inflation data for July
are due on Friday. 

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