CANADA FX DEBT-C$ firms as greenback tide wanes a bit

Thu Oct 2, 2014 4:35pm EDT
 
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Canadian dollar at C$1.1163 or 89.58 U.S. cents
    * Bond prices lower across the maturity curve

 (Adds details, quotes, updates prices)
    By Leah Schnurr
    TORONTO, Oct 2 (Reuters) - The Canadian dollar firmed
against the greenback on Thursday, recovering some of its recent
losses, but analysts expect the move to be short-lived with the
currency likely to see further declines.
    Several factors have been pulling the loonie lower but the
major driver has been the U.S. dollar's ongoing strength as the
U.S. economy picks up speed and the Federal Reserve is seen as
moving closer to raising interest rates.
    Movements in the greenback continued to steer the Canadian
dollar on Thursday with a U.S. dollar retreat giving the loonie
some breathing room. 
    "There seems to be a general sentiment in the market that
the economic data of late hasn't really been as good as everyone
had expected. The market could be somewhat adjusting their
expectations for when the Fed begins normalizing," said Bipan
Rai, director of foreign exchange strategy at CIBC World Markets
in Toronto.
    "The Canadian dollar is at the mercy of what's happening to
the U.S. dollar right now. Certainly, any sort of strength we do
get in the loonie, it looks like people are adding to their
hedges and bidding the U.S. dollar back up against it," he said.
    The Canadian dollar ended the North American
session at C$1.1163 to the greenback, or 89.58 U.S. cents,
stronger than Wednesday's close of C$1.1172, or 89.51 U.S.
cents. The loonie climbed to a session high of C$1.1071 in the
overnight session, its firmest level in a week.
    The euro strengthened against the Canadian dollar after the
head of the European Central Bank gave no indication of an
imminent stimulus program through the purchase of sovereign
bonds. 
    The Canadian dollar is likely to resume its downward path as
soon as the U.S. dollar picks up momentum again, but much of the
near-term action will depend on how the U.S. jobs report and
Canadian export data look on Friday, said Scott Smith, senior
market analyst at Cambridge Mercantile Group in Calgary. 
    The currency pairing could break sustainably through C$1.12
if the jobs data comes in strong following a disappointing
August figure, and if the Canadian data is soft, Smith said.
    "The risk with tomorrow is potentially another weak jobs
report out of the U.S. and we may not have the steam to make
another run at C$1.12."
    Canadian government bond prices were lower across the
maturity curve, with the two-year down 1 Canadian
cent to yield 1.120 percent, and the benchmark 10-year
 down 22 Canadian cents to yield 2.095 percent.

 (Editing by Peter Galloway)