CANADA FX DEBT-C$ weakens to nearly 3-week low; technicals weigh

Tue Aug 30, 2016 4:48pm EDT
 
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(Adds trader comment, updates prices to close)
    * Canadian dollar settles at C$1.3096, or 76.36 U.S. cents
    * Loonie touches weakest since Aug. 10 at C$1.3103
    * Canadian bond prices slightly higher across curve

    By Alastair Sharp
    TORONTO, Aug 30 (Reuters) - The Canadian dollar weakened on
Tuesday to a nearly three-week low against its U.S. counterpart,
with technical signals suggesting more weakness ahead of a key
U.S. jobs report on Friday.
    The greenback rose against a basket of major currencies as
investors digest recent policymaker comments and wait to see if
Friday's U.S. jobs report boost expectations the Federal Reserve
will soon raise interest rates.
    The Canadian dollar settled at C$1.3096 to the
greenback, or 76.36 U.S. cents, weaker than Monday's close of
C$1.3023, or 76.79 U.S. cents.
    "Dollar/Canada has broken a couple of moving averages over
the last 24 hours," said David Bradley, a director of foreign
exchange trading at Scotiabank. "It broke the 40-day and 55-day,
so if we get a close up in this area I think it's probably good
for a continuation higher."
    The currency's strongest level of the session was C$1.3009,
while the close was just off its weakest level of the session
and weakest since Aug. 10 at C$1.3103.
    The greenback's strength also weighed on oil prices, adding
to pressure from growing glut worries amid forecasts for higher
U.S. crude stockpiles and Iran's remarks that it was on target
to reach peak production. U.S. crude settled down 1.3
percent at $46.35 a barrel.     
    Canada is a major oil exporter whose currency typically
benefits from higher prices.
    Losses for the loonie came as Canada's current account
deficit widened to a near-record C$19.86 billion ($15.28
billion) in the second quarter, data from Statistics Canada
showed. 
    Investor demand for gold and silver in the wake of Britain's
vote to leave the European Union in late June helped push
Canadian producer prices up by 0.2 percent in July, Statistics
Canada said. 
    Canadian government bond prices were slightly higher across
the maturity curve, with the two-year up half a
Canadian cent to yield 0.587 percent, and the benchmark 10-year
 adding 4 Canadian cents to yield 1.022 percent.     
     
    Canada's gross domestic product data for the second quarter
is due for release on Wednesday. Economists expect a contraction
at a 1.5 percent annualized pace as growth was shaken by
wildfires in northern Alberta that disrupted oil production.
 
    GDP figures for June that are also set for release on
Wednesday are expected to show growth picked up by 0.4 percent,
which should bolster expectations that the economy will rebound
in the third quarter.

 (Additional reporting by Fergal Smith; Editing by Lisa Von Ahn
and David Gregorio)