January 19, 2017 / 10:06 PM / 8 months ago

CANADA FX DEBT-C$ hits 2-week low against stronger greenback

(Adds strategist comment, updates prices to close)
    * Canadian dollar at C$1.3314, or 75.11 U.S. cents
    * Loonie touches its weakest since Jan. 4 at C$1.3353
    * Bond prices lower across a steeper yield curve

    By Alastair Sharp
    TORONTO, Jan 19 (Reuters) - The Canadian dollar weakened to
a two-week low against its U.S. counterpart on Thursday,
brushing off firm domestic data a day after the Bank of Canada
left the door open to cutting interest rates.
    The greenback was stronger against a basket of currencies as
solid U.S. labor and housing data backed the case for strong
U.S. economic growth.
    Canadian manufacturing sales rebounded 1.5 percent in
November from October, Statistics Canada said. Analysts polled
by Reuters had expected a 1.0 percent rise. 
    On Wednesday, the Bank of Canada left its policy rate on
hold at 0.5 percent. The central bank warned that a rate cut
remains on the table, warning there would be "material
consequences" if U.S. President-elect Donald Trump enacts
protectionist policies.
    "The underlying tone from the Bank of Canada was dovish, and
while noting that a rate cut remains on the table is not
necessarily new it is important from a currency perspective that
it was mentioned at the level that the currency was trading at
the time," said Mazen Issa, senior foreign exchange strategist
at TD Securities in New York.
    The loonie, as Canada's currency is colloquially known, was
at the strong end of its recent C$1.30 to C$1.36 range before
the central bank governor's comments.
    It settled at C$1.3314 to the greenback, or 75.11
U.S. cents, on Thursday, weakening from Wednesday's close of
C$1.3259, or 75.42 U.S. cents.
    The currency's strongest level of the session was C$1.3253,
while it touched its weakest since Jan. 4 at C$1.3353.
    Trump's choice for commerce secretary, Wilbur Ross, said on
Wednesday that renegotiating the North American Free Trade
agreement with Mexico and Canada would likely be the Trump
administration's first priority. 
    Canada sends 75 percent of its exports to the United States.
    Trump takes office on Friday.
    Prices of oil, one of Canada's major exports, recovered from
a one-week low as the International Energy Agency said oil
markets were tightening even before cuts agreed by OPEC and
other producers took effect. 
    In separate domestic data, foreign investment in Canadian
securities dropped to an 11-month low in November, with
non-residents buying a net C$7.24 billion worth of bonds, stocks
and money market paper, Statistics Canada said. 
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year down 3 Canadian cents
to yield 0.787 percent and the 10-year falling 41
Canadian cents to yield 1.756 percent.

 (Additional reporting by Fergal Smith; Editing by Meredith
Mazzilli and Lisa Shumaker)

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