CANADA FX DEBT-C$ weaker on Fed comments, lower oil price

Tue Nov 5, 2013 5:16pm EST
 
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* C$ ends at C$1.0458 vs US$, or 95.62 U.S. cents
    * Fed official's comments boost greenback
    * Oil price slip hurts Canadian currency
    * Canadian bond prices fall

    By Alastair Sharp
    TORONTO, Nov 5 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday after a U.S. Federal
Reserve official said 3 percent U.S. growth was within reach,
while U.S. economic data also helped support the greenback and
falling oil prices hurt the energy-linked loonie. 
    Boston Fed President Eric Rosengren said relatively slow
growth was easily imaginable and the Fed could keep interest
rates near zero into 2016, but he added it is also possible that
U.S. economic growth could near 3 percent by early next year.
 
     "That's more hawkish, so the (U.S.) dollar has just turned
here," Steve Butler, director of foreign exchange trading at
Scotiabank, said during morning trade. "That's really what
kicked it off."
    The Canadian dollar ended the North American
session changing hands at C$1.0458 to the greenback, or 95.62
U.S. cents, compared with C$1.0418, or 95.99 U.S. cents, at
Monday's North American close.
    Also helping the U.S. dollar, the Institute for Supply
Management (ISM) said U.S. service-sector business activity
picked up in October and firms took on workers despite a partial
government shutdown, though new order growth slowed for a second
straight month.  
    "The ISM data helped the U.S. dollar. There was also some
focus on weakness in oil prices that could have helped to
undermine the (Canadian) currency a little bit," said Mark
Chandler, head of Canadian fixed income and currency strategy at
Royal Bank of Canada.
    U.S. crude oil hit a four-month low on forecasts for rising
supplies and continued weak demand. 
    Currency traders are looking ahead to major U.S. economic
data later in the week, which could shape opinion on whether the
Fed will trim its monetary stimulus program. 
    "Markets are almost willing to look at a soft number and
explain it away...if it does come in firmer it may have more of
an outsized reaction in both fixed income and currency markets,"
Chandler said.
    U.S. gross domestic product data for the third quarter is
due on Thursday and will provide a measure of the momentum in
the economy before last month's partial government shutdown,
while jobs data for October is due on Friday.    
    In the Canadian government bond market, the two-year bond
 was off 2-1/2 Canadian cents to yield 1.130 percent,
while the benchmark 10-year bond fell 31 Canadian
cents to yield 2.534 percent.