CANADA FX DEBT-C$ firms as investors brace for key global events

Fri Apr 15, 2016 5:10pm EDT
 
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* Canadian dollar ended at $1.2837, or 77.90 U.S. cents
    * Bond prices higher across the maturity curve

    By Fergal Smith
    TORONTO, April 15 (Reuters) - The Canadian dollar
strengthened slightly against a broadly weaker U.S. counterpart
on Friday as investors braced for key global events over the
weekend.
    Major oil exporters will meet in Doha on Sunday to discuss
freezing output around current levels, while market attention
also turned to the IMF-World Bank Group spring meetings in
Washington.
    "I think it is an appropriate step for tactical names to be
squaring up positions ahead of this much event risk," said Jack
Spitz, managing director of foreign exchange, National Bank
Financial.
    Oil prices fell as traders and analysts doubted the meeting
in Doha will help to clear global oversupply quickly. U.S. crude
 prices settled at $40.36 a barrel, down 2.75 percent.
 
    Canadian home prices and sales rose in March, showing the
country's housing market boom still had momentum even as
separate factory data suggested an increase in economic growth
at the beginning of the year may not be sustainable.
 
    Speculators increased bullish bets on the loonie, Commodity
Futures Trading Commission data showed.
    Net long Canadian dollar positions rose to 2,385 contracts
in the week ended April 12 from 97 contracts in the prior week.
At the end of January, net short exposure was the largest in
five months at 66,819 contracts.
    The Canadian dollar ended at $1.2837 to the
greenback, or 77.90 U.S. cents, slightly stronger than
Thursday's close of C$1.2849, or 77.83 U.S. cents.
    The currency's strongest level of the session was C$1.2798,
while it touched its weakest since Tuesday at C$1.2903.
    The loonie hit a nearly nine-month high at C$1.2744 on
Wednesday. However, the central bank warned the same day that
the country's improving economy faced downside risks, including
a stronger currency that could drag on non-commodity exports.
 
    Still, the overnight index swaps market moved to imply a
slight probability of a Bank of Canada interest rate hike this
year after having implied a more than 50 percent probability of
a cut at the start of March. 
    Canadian government bond prices were higher lower across the
maturity curve, with the two-year price up 1 Canadian
cent to yield 0.592 percent and the benchmark 10-year
 rising 22 Canadian cents to yield 1.271 percent.
    The Canada-U.S. two-year bond spread was 1.6 basis points
less negative at -14.6 basis points as Canadian government bonds
underperformed at the front of the curve. One week ago it
touched its smallest gap in more than five months at -13.6 basis
points.

 (Reporting by Fergal Smith; editing by Meredith Mazzilli and
Tom Brown)