CANADA FX DEBT-C$ weakens as oil tumbles, loonie loses 2.2 pct in October

Mon Oct 31, 2016 5:12pm EDT
 
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(Adds analyst quotes and details on trade minister's comments
and producer price data and updates prices)
    * Canadian dollar ends at C$1.3411, or 74.57 U.S. cents
    * Loonie falls 2.2 percent for month of October
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Oct 31 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as oil prices tumbled,
but losses were restrained after much deeper losses over the
course of the month.
    For October, the loonie fell 2.2 percent, pressured by the
Bank of Canada's recent acknowledgement that it had considered
cutting interest rates at its policy meeting.
    Losses have become "stretched" and investors are not going
to chase the Canadian dollar lower, but will wait to sell it on
bounces, said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets.    
    U.S. crude oil futures settled $1.84 lower at $46.86
a barrel on doubts about OPEC's ability to implement its planned
production cuts, with the market further weighed by expectations
that the cartel had record output in October. 
    "It's going to take bigger moves in key fundamentals," such
as the price of oil, U.S. interest rates, or Republican
presidential candidate Donald Trump's probability of winning the
U.S. election for the Canadian dollar to move much lower,
Anderson said.
    Trump has said he would renegotiate or scrap the North
American Free Trade Agreement if he is elected.
    The Canadian dollar ended at C$1.3411 to the
greenback, or 74.57 U.S. cents, weaker than Friday's close of
C$1.3384, or 74.72 U.S. cents.
    The currency's strongest level of the session was C$1.3376,
while its weakest was C$1.3431.
    On Friday, the loonie touched its weakest since in seven
months at C$1.3434.
    The Canadian government will have to work hard to ensure
firms can benefit from a landmark free trade deal that Canada
has reached with the European Union, Trade Minister Chrystia
Freeland said.     
    Speculators trimmed bearish bets on the Canadian dollar,
Commodity Futures Trading Commission data showed on Friday. Net
short Canadian dollar positions dipped to 13,324 contracts in
the week ended Oct. 25 from 14,298 in the prior week.
    
    Canadian government bond prices were higher across the yield
curve, with the two-year up 3.5 Canadian cents to
yield 0.55 percent and the benchmark 10-year rising
27 Canadian cents to yield 1.198 percent.
    In domestic data, producer prices rose by 0.4 percent in
September from August. 
    On Tuesday, data is expected to show that Canada's economy
grew 0.2 percent in August. 
    Also on Tuesday, the Canadian government will update its
fiscal and economic position, providing new estimates for its
budget deficit and for economic growth.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn and
Alistair Bell)