CANADA FX DEBT-C$ weakens as falling oil prices outweigh robust GDP data

Fri Nov 28, 2014 9:32am EST
 
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* Canadian dollar at C$1.1405 or 87.68 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Nov 28 (Reuters) - The Canadian dollar fell sharply
against the U.S. dollar on Friday as tumbling U.S. crude prices
was the dominant driver for the currency, overshadowing
higher-than-expected third-quarter Canadian growth figures.
    Crude oil prices hit a fresh four-year low following OPEC's
decision on Thursday to keep current production levels
unchanged, a move market participants said would leave oil
markets oversupplied. 
    U.S. crude, in particular, was down nearly 6 percent from
Wednesday's finish. U.S. financial markets were closed on
Thursday for the U.S. Thanksgiving holiday.
    In Canada, strong exports, business investment and consumer
spending helped lift the economy by an annualized 2.8 percent in
the third quarter, eclipsing the 2.1 percent forecast by the
market. 
    "Certainly this report on its own would provide a lift for
the Canadian dollar ... however, the currency has been buffeted
in recent days by the weakening in oil prices," said Paul
Ferley, assistant chief economist at Royal Bank of Canada.
    "Oil prices will probably be the more dominant factor."
    At 9:16 a.m., the Canadian dollar traded at C$1.1405
against the greenback, or 87.68 U.S. cents, weaker than
Thursday's close at C$1.1332, or 88.25 U.S. cents. 
    It briefly pared losses, touching a high of C$1.1360, or
88.03 U.S. cents, immediately after the GDP report was released,
but quickly retreated back to earlier session levels.
    Canadian government bond prices were higher across the
maturity curve, with the two-year rising 7 Canadian
cents to yield 0.992 percent and the benchmark 10-year
 climbing 7 Canadian cents to yield 1.891 percent.

 (Editing by Jeffrey Benkoe)