CANADA FX DEBT-C$ dips as oil falls, greenback rises; further strength seen ahead

Thu Jun 15, 2017 4:52pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

    * Canadian dollar at C$1.3279, or 75.31 U.S. cents
    * Bond prices lower across a yield curve

    By Solarina Ho
    TORONTO, June 15 (Reuters) - The Canadian dollar softened
against the U.S. dollar on Thursday, paring some of this week's
gains as lower oil prices and broader strength in the greenback
offset stronger-than-expected domestic manufacturing data.
    Canadian manufacturing sales topped forecasts and hit a
record in April as sales of petroleum and coal products
rebounded after two months of declines, data from Statistics
Canada showed.             
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.3279 to the greenback, or 75.31 U.S. cents, down
0.2 percent.
    The currency traded in a range of C$1.3226 to C$1.3308.
    Oil prices touched six-month lows, under pressure from high
global inventories and doubts about OPEC's ability to reduce the
glut. U.S. crude        prices were down 0.72 percent to $44.41
a barrel.     
    Shaun Osborne, chief currency strategist at Scotiabank said
the summer driving season usually means an increase in demand
and tighter supply, but inventory data suggests significant
excess glut.
    The U.S. dollar        rose against a basket of major
currencies, supported by the Federal Reserve's decision on
Wednesday to boost interest rates further.             
    On Wednesday, the loonie touched its strongest in 3-1/2
months at C$1.3165. It has gained 1.5 percent this week, helped
by signals from the Bank of Canada that higher interest rates
lie ahead.
    "That will be quite significant for Canadian dollar going
forward," said Osborne, adding the currency could potentially
trade below C$1.30 in the coming months.
    "Because it won't be just one rate increase, it will be more
than one, and we barely have one rate increase factored in for
Canada over the next 12 months at this point."
    Chances of a rate hike this year have surged to more than 90
percent from less than one-in-four before stronger-than-expected
jobs data on Friday.           
    The central bank, which had long said interest rates are too
blunt a tool to tackle the country's housing market, may have
finally decided to act and at least limit its role in fueling a
potential bubble with low interest rates.             
    Resales of Canadian homes dropped 6.2 percent in May from
April, while Toronto sales plunged 25.3 percent as new housing
policy changes sideswiped demand and new listings rose again,
the Canadian Real Estate Association said.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            price down 7.5 Canadian
cents to yield 0.918 percent and the benchmark 10-year
            falling 38 Canadian cents to yield 1.533 percent.

 (Reporting by Solarina Ho; Additional reporting by Fergal
Smith; Editing by Bernadette Baum and David Gregorio)