CANADA FX DEBT-C$ gains as Trump travel curb pressures greenback

Mon Jan 30, 2017 4:32pm EST
 
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(Adds analyst quotes and updates prices)
    * Canadian dollar ends at C$1.3120, or 76.22 U.S. cents
    * Loonie touches a nearly one-week low at C$1.3168
    * Bond prices mixed across the yield curve

    By Fergal Smith
    TORONTO, Jan 30 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday, recovering from an
earlier nearly one-week low, as uncertainty triggered by a
travel curb ordered by U.S. President Donald Trump pressured the
greenback.
    Gains for the Canadian dollar came even as prices of oil,
one of Canada's major exports, fell. U.S. crude oil futures
 settled 54 cents lower at $52.63 a barrel after another
increase in U.S. drilling activity spread concern over rising
output. 
    "It is an unusual risk aversion trade to see the Canadian
dollar strengthening in a day when oil and stocks are down and
that speaks to the fresh uncertainty in the United States," said
Adam Button, currency analyst at ForexLive.
    "The market is seeing signs that (U.S.) policy making will
be haphazard and quickly rolled out and poorly thought out." 
    The U.S. dollar fell more than 1 percent against the
Japanese yen following a weekend of negative headlines
relating to Trump's executive orders on immigration.
 
    The market braced for Canada's gross domestic product data
for November and a speech by Bank of Canada Governor Stephen
Poloz on Tuesday.
    Earlier this month, Poloz said a rate cut remained "on the
table" if the risks facing the country are realized, warning
there would be "material consequences" if Trump enacts
protectionist policies.
    There is a risk that the central bank governor comes across
as more optimistic due to the strength of recent domestic data
and the expected tailwind of fiscal stimulus, Button said.
    The Canadian dollar ended at C$1.3120 to the
greenback, or 76.22 U.S. cents, stronger than Friday's close of
C$1.3138, or 76.12 U.S. cents.
    The currency's strongest level of the session was C$1.3076,
while its weakest was C$1.3168.
    Speculators turned bullish on the Canadian dollar for the
first time since September, data from the Commodity Futures
Trading Commission and Reuters calculations showed on Friday.
Canadian dollar positions swung to net long 2,519 contracts as
of Jan. 24 from net short 5,456 contracts a week earlier.
 
    Canadian government bond prices were mixed across the yield
curve, with the two-year up 2 Canadian cents to yield
0.795 percent and the 10-year declining 9 Canadian
cents to yield 1.787 percent.
    A French-Canadian university student was the sole suspect in
a shooting at a Quebec City mosque that killed six people and
injured 17 others, Canadian authorities said, in what Prime
Minister Justin Trudeau called "a terrorist attack."
 

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
James Dalgleish)