CANADA FX DEBT-C$ slips after Fed minutes, jobs data in view

Thu Oct 9, 2014 9:42am EDT
 
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* Canadian dollar at C$1.1115 or 89.97 U.S. cents
    * Bond prices mixed across the maturity curve

    By Leah Schnurr
    TORONTO, Oct 9 (Reuters) - The Canadian dollar dipped
against the greenback Thursday as investors digested minutes
from the Federal Reserve's most recent meeting that indicated
there was concern a rising U.S. dollar could hold back inflation
from the Fed's target.
    The loonie was also pressured by weaker oil prices and the
market was cautious ahead of the Canadian unemployment report
for September, the main economic event of the week. 
    Wednesday's Fed minutes roiled currency markets as they
showed concern from a "couple" of policymakers that the recent
rally in the U.S. dollar might slow a gradual increase in
inflation toward the Fed's 2 percent goal.    
    The U.S. dollar has been on a tear since July and is one of
the major reasons behind the Canadian dollar's weakness in
recent months.
    The minutes prompted some investors to push their
expectation for when the Fed will raise rates further out into
next year.
    While it was somewhat surprising that the foreign exchange
rate was talked about as much as it was, the market's reaction
may be a little overdone, said Greg Moore, senior currency
strategist at Royal Bank of Canada in Toronto.
    "It seemed to be the two dissenting Fed members that were
focused on the potential negative impacts on inflation, (which)
suggests it's not a strong and broad view among the Fed as a
whole," Moore said.
    "While they may be talking about it for the first time in
quiet a while, it doesn't really change the overall picture."
    The Canadian dollar was at C$1.1115 to the
greenback, or 89.97 U.S. cents, weaker than Wednesday's close of
C$1.1104, or 90.06 U.S. cents. The loonie had touched a one-week
high in overnight trading.
    Fed policy will likely remain at the forefront with a number
of central bank officials scheduled to give speeches over the
next two days.
    At home, focus was turning to Friday's jobs report, which is
forecast to show Canadian employers added 20,000 jobs last
month, rebounding from a loss of 11,000 in August. But the
volatile nature of the report, which has seen big swings both up
and down, could keep investors wary of taking aggressive bets.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year up 0.2 Canadian
cents to yield 1.052 percent and the benchmark 10-year
 up 2 Canadian cents to yield 2.012 percent.

 (Editing by Bernadette Baum)