July 6, 2017 / 8:34 PM / 19 days ago

CANADA FX DEBT-C$ near flat ahead of jobs data as risk appetite wanes

3 Min Read

    * Canadian dollar at C$1.2969, or 77.11 U.S. cents
    * Bond prices lower across a steeper yield curve
    * Two-year yield touches its highest since September 2014

    By Fergal Smith
    TORONTO, July 6 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday as oil prices
pared earlier gains and risk appetite waned, offsetting domestic
data showing a solid gain for exports.
    At 4 p.m. (2000 GMT), the Canadian dollar          was
trading at C$1.2969 to the greenback, or 77.11 U.S. cents, down
0.1 percent.
    Losses for equity markets weighed on Canada's currency, said
David Bradley, director of foreign exchange trading at
Scotiabank.
    Canada's commodity-linked currency tends to underperform
when risk appetite falls.
    U.S. stocks retreated after a round of disappointing labor
market data clashed with the prospect of a more hawkish Federal
Reserve, while rising tensions in the Korean peninsula provided
additional pressure.             
    U.S. crude oil futures        settled 39 cents higher at
$45.52 a barrel after a sharper-than-expected decline in crude
oil and gasoline stocks, but were off the day's highs.
    Oil is one of Canada's major exports.
    Canada's exports and imports both hit record highs in May,
reflecting continued economic strength ahead of a highly
anticipated interest rate decision next week.             
    Expectations for a rate increase have been rising since top
Bank of Canada officials asserted in June that a pair of 2015
interest rate cuts had done their job in cushioning the economy
from collapsing oil prices.             
    Investors are "probably squaring up" their positions in the
Canadian dollar ahead of Friday's jobs data, Bradley said.
    The June employment report will be the last major piece of
domestic data before the rate announcement.  
    The currency traded in a range of C$1.2924 to C$1.2984. It
touched on Tuesday its strongest since September at C$1.2912.
    Still, foreign exchange strategists expect the loonie to
weaken over the coming months as the recent rally driven by
expectations for higher rates runs out of steam and lower oil
prices weigh.             
    Separate domestic data showed that the value of Canadian
building permits issued in May jumped 8.9 percent on plans for
more construction of residential buildings, particularly in the
red-hot market of Ontario.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries and German Bunds,
pressured by the prospect of hawkish global central bank policy.
            
    The two-year            fell 2 Canadian cents to yield 1.142
percent and the 10-year             declined 36 Canadian cents
to yield 1.834 percent.
    The two-year yield touched its highest since September 2014
at 1.159 percent. 

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
 

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