February 17, 2017 / 9:51 PM / 5 months ago

CANADA FX DEBT-C$ weakens on corporate selling as greenback climbs

4 Min Read

 (Adds analyst quotes and details on threat of proposed U.S.
border adjustment tax and CFTC data and updates prices)
    * Canadian dollar ends at C$1.3099, or 76.34 U.S. cents
    * Loonie touches its weakest since Feb. 10 of C$1.3126
    * Bond prices end higher across the yield curve
    * 10-year yield hits one-week low at 1.694 percent

    By Fergal Smith
    TORONTO, Feb 17 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, pressured by corporate
selling ahead of a long weekend and broader gains for the
greenback.
    For the week, the loonie dipped 0.1 percent. It was the
second straight week that the loonie edged lower after having
reached on Jan. 31 its strongest level in four months of
C$1.2969 against the greenback.
    "The market really wants to take a run below C$1.30, but
it's just not quite there yet," said Adam Button, currency
analyst at ForexLive.
    The Canadian dollar          ended at C$1.3099 to the
greenback, or 76.34 U.S. cents, slightly weaker than Thursday's
close of C$1.3080, or 76.45 U.S. cents.
    "There's talk about corporate demand (for U.S. dollars)
going through today," Button said.
    "A long weekend kind of move."
    Monday is a market holiday for both Canada and the United
States.
    The currency's strongest level of the session was C$1.3061,
while it touched its weakest since Feb. 10 of C$1.3126.
    The U.S. dollar        rose against a basket of currencies,
leaving it little changed on the week following mildly hawkish
comments from Federal Reserve Chair Janet Yellen and
surprisingly strong U.S. data on retail sales and consumer
prices.
    "Given all the news and data over the past week, the U.S.
dollar should be much higher," Button said.
    The recent strengthening of the Canadian dollar belies the
threat of a proposed U.S. border adjustment tax that could slam
the currency due to Canada's heavy reliance on exports to its
southern neighbor, forex strategists and fund managers say.
            
    Still, speculators increased bullish bets on the Canadian
dollar to the most since September, data from the Commodity
Futures Trading Commission and Reuters calculations showed.
Canadian dollar net long positions rose to 19,340 contracts as
of Feb. 14 from 8,550 a week earlier.         
    U.S. crude        prices settled 4 cents higher at $53.40 a
barrel. Oil is one of Canada's major exports.          
    Canadian government bond prices rose across the yield curve
in sympathy with U.S. Treasuries as concerns over the French
election helped support demand for safe-haven assets.
    The two-year            rose 3.5 Canadian cents to yield
0.778 percent and the 10-year             climbed 28 Canadian
cents to yield 1.711 percent.
    The 10-year yield touched its lowest intraday level since
Feb. 10 at 1.694 percent.
    Foreign investors bought C$10.23 billion worth of Canadian
securities in December, sealing a new annual record for
purchases of bonds, stocks and money market paper.              
  

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli and
Jonathan Oatis)
  
 

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