CANADA FX DEBT-C$ touches 80 U.S. cents for first time in 10 months, ends flat

Fri Apr 29, 2016 4:57pm EDT
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(Adds details on CFTC data, updates prices)
    * Canadian dollar ended at C$1.2548, or 79.69 U.S. cents
    * Loonie touched its strongest since July 1, 2015 of
    * Bond prices lower across the maturity curve

    By Fergal Smith
    TORONTO, April 29 (Reuters) - Canada's dollar ended little
changed against a broadly weaker U.S. counterpart on Friday as
oil turned slightly lower and as corporate hedgers sold the
currency after it reached 80 U.S. cents for the first time in
nearly 10 months.
    The loonie, as Canada's dollar is commonly known, has
rallied 17 percent from a 12-year low in January of C$1.4689,
helped by better-than-expected domestic economic activity,
fiscal stimulus and rebounding oil prices.
    However, it had trouble on Friday breaking convincingly
through C$1.2500, or 80 U.S. cents, due to selling by corporate
hedgers, said Blake Jespersen, managing director, foreign
exchange sales at BMO Capital Markets.
    "80 (U.S.) cents seems to be a nice psychological level for
most people, so seeing a fair bit of resistance there," he
    Oil prices dipped after an early rise to 2016 peaks. U.S.
crude settled at $45.92 a barrel, down 0.24 percent.
    Canada's economy contracted 0.1 percent in February, as
expected, after climbing 0.6 percent in January. 
    It leaves the economy on track to grow 3 percent in the
first quarter, according to Richard Gilhooly, the head of rates
strategy at CIBC Capital Markets.    
    The U.S. dollar fell against a basket of major
currencies, including deep losses against the Japanese yen.
    The Canadian dollar ended at C$1.2548 to the
greenback, or 79.69 U.S. cents, little changed from Thursday's
close of C$1.2549, or 79.69 U.S. cents.
    The currency's weakest level was C$1.2588, while it touched
its strongest since July 1, 2015 of C$1.2497.
    A shift in expectations for the direction of Canadian
interest rates has added to recent support for the loonie.
Overnight index swaps (OIS) imply an 18 percent chance of a rate
hike this year, a swing from the more than 50 percent chance of
a cut seen at the beginning of March. 
    Speculators increased bullish bets on the loonie, Commodity
Futures Trading Commission data showed. Net long Canadian dollar
positions rose to 11,999 contracts in the week ended April 26
from 7,308 contracts in the prior week. 
    Canadian government bond prices were lower across the
maturity curve, with the two-year price down 4
Canadian cents to yield 0.692 percent and the benchmark 10-year
 falling 30 Canadian cents to yield 1.509 percent.
    The Canada-U.S. 10-year spread was 3.8 basis points less
negative at -32.4 basis points, its smallest gap since Jan. 20,
2015, as Canadian government bonds underperformed.

 (Reporting by Fergal Smith; Editing by Paul Simao and Chizu