CANADA FX DEBT-C$ firms by a cent as higher crude prices, factory sales lift

Fri Nov 14, 2014 4:34pm EST
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(Adds closing prices and analyst comment)
    * Canadian dollar at C$1.1277 or 88.68 U.S. cents
    * Bond prices mixed across the maturity curve

    By Leah Schnurr and Solarina Ho
    OTTAWA, Nov 14 (Reuters) - The Canadian dollar strengthened
a cent against its U.S. counterpart on Friday, buoyed by
stronger oil prices and data that showed domestic factory sales
rose more than expected in September.
    Canadian manufacturing sales, which rose 2.1 percent, helped
put a floor under the Canadian dollar. 
    U.S. crude futures climbed on expectations of higher demand
for heating oil following forecasts of a cold weekend in parts
of the United States. The higher prices helped the
commodities-linked loonie rebound the day after a drop in crude
knocked the currency weaker.
    "With oil prices moving the way they are, it's no surprise
the Canadian dollar had a positive day," said Lennon Sweeting, a
Currency Strategist with USForex.
    "And manufacturing shipments today, albeit second tier data,
was very positive and was a big improvement from last month's
release and definitely well ahead of what expectations were for
this month."
    The Canadian dollar closed at C$1.1277 to the
greenback, or 88.68 U.S. cents, firmly stronger than Thursday's
close of C$1.1376, or 87.90 U.S. cents.
    The Canadian dollar, which experienced whip-saw trading in
recent sessions, was less than 0.4 percent stronger for the
    While analysts expect the Canadian dollar is likely to
consolidate around current levels in the short-term, most see
more weakness down the line for the loonie.
    "I think we're rangebound for the U.S. dollar-Canadian
dollar for now and the next move is really going to have to come
from a major data point," said Mazen Issa, senior Canada macro
strategist at TD Securities in Toronto.
    Issa sees next week's inflation data or third-quarter gross
domestic product at the end of the month as potential catalysts,
while more signs of strength in the U.S. economy could also lift
the greenback to the detriment of the loonie.
    "The bias, for now, is you could still see a higher U.S.
dollar-Canadian dollar, but I would admit that the rally in U.S.
dollar-Canadian dollar has looked a little tired recently, maybe
a bit overbought," he said.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year down 1.5 Canadian
cents to yield 1.013 percent and the benchmark 10-year
 up 6 Canadian cents to yield 2.037 percent.

 (Editing by Nick Zieminski and Grant McCool)