CANADA FX DEBT-C$ steadies but still on track for worst month since Jan

Mon Sep 29, 2014 4:27pm EDT
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* Canadian dollar at C$1.1153 or 89.66 U.S. cents
    * Bond prices higher across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Sept 29 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday, stabilizing after
hitting a six-month low overnight, though optimism over the U.S.
economy was expected to keep the loonie on the ropes in the
    The Canadian currency lost 1.7 percent last week, breaking
through the C$1.11 level as it was hurt by ongoing broad U.S.
dollar strength and the growing view that the Bank of Canada
will stay on the sidelines longer than the Federal Reserve.
    The loonie had extended those losses in early trading but
managed to recover with investors finding few fresh incentives
to push the currency lower, said Scott Smith, senior market
analyst at Cambridge Mercantile Group in Calgary.
    "We're really corralled after last week's fairly poor
performance in the loonie," Smith said.
    There was no Canadian economic data on Monday, but the
calendar will pick up with July gross domestic product on
Tuesday, and trade balance data later in the week. Investors
will also be watching the U.S. jobs report due on Friday.
    The Canadian dollar ended the North American
session at C$1.1153 to the greenback, or 89.66 U.S. cents, a
hair stronger than Friday's close of C$1.1155, or 89.65 U.S.
    The loonie hit a session low of C$1.1178 in overnight
trading, its lowest level since late March.
    After the U.S. dollar-Canadian dollar spent much of August
comfortable around the C$1.09 area, the run-up in the currency
pairing through September has taken it into relatively uncharted
territory, said Rahim Madhavji, president at
in Toronto.
    With one trading day left in September, the loonie is down
2.5 percent for the month, putting it on track for its worst
month since January when it was caught in a steep selloff.
    "As long as the U.S. economic data continues to be quite
positive, the U.S. dollar will continue to grind higher," said
    "Then six months down the line, we might see things start to
reverse because what's good for the U.S. is good for Canada,
just a bit in the future," he added.
    Encana Corp's bid to buy the United States' Athlon
Energy for $5.93 billion in cash could imply a large
negative flow for the Canadian dollar leading into mid-December,
when the deal is expected to close, Camilla Sutton, chief
currency strategist at Scotiabank, wrote in a note.
    Canadian government bond prices were up across the maturity
curve, with the two-year up 3 Canadian cents to yield
1.119 percent and the benchmark 10-year up 33
Canadian cents to yield 2.128 percent.

 (editing by Gunna Dickson)