CANADA FX DEBT-C$ surrenders gains after reaching 9-day high

Thu Mar 30, 2017 5:04pm EDT
 
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 (Adds strategist quotes and updates prices)
    * Canadian dollar ends at C$1.3334, or 75.00 U.S. cents
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, March 30 (Reuters) - The Canadian dollar
surrendered early gains as it closed unchanged on Thursday after
posting a nine-day high against its U.S. counterpart, ahead of
Friday's release of the country's gross domestic product data
for January.
    U.S. crude        prices settled 84 cents higher at $50.35 a
barrel after Kuwait backed an extension of Organization of the
Petroleum Exporting Countries production cuts to reduce a global
glut.                 
    "The big story is oil back above 50 ... it is a huge relief
for CAD," said Greg Anderson, global head of foreign exchange
strategy in New York.
    Oil is one of Canada's major exports.        
    The U.S. dollar        rose after U.S. fourth-quarter gross
domestic product growth figures were revised higher and
softer-than-expected readings for German inflation weighed on
the euro.                         
    Some investors took the opportunity to sell euros against
the Canadian dollar, Anderson said.
    "When euro started to sell off hard today, it just added
wind to CAD sails."
    The Canadian dollar          ended at C$1.3334 to the
greenback, or 75.00 U.S. cents, little changed from Wednesday's
close of C$1.3333, or 75.00 U.S. cents.    
    The currency's weakest level of the session was C$1.3347,
while it touched its strongest since March 21 at C$1.3278.
    The Wall Street Journal reported that President Donald
Trump's administration was signaling to Congress that it would
seek mostly modest changes to the North American Free Trade
Agreement in upcoming negotiations with Mexico and Canada.
            
    Canada exports about 75 percent of its exports to the United
States, and traders are closely following developments in U.S.
trade policy. 
    In domestic data, producer prices edged up 0.1 percent in
February from January, which was less than the 0.3 percent
increase analysts had expected. Still, the year-on-year gain
picked up to 3.5 percent from 2.5 percent.                 
    On Friday, Canada issues January GDP data, expected by
economists to rise 0.3 percent. That could set the stage for a
stronger performance in the first quarter than initially
expected.         
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 4.5 Canadian cents to
yield 0.748 percent, its highest since March 24, and the 10-year
            falling 33 Canadian cents to yield 1.632 percent.

 (Reporting by Fergal Smith; Editing by W Simon and Peter
Cooney)