CANADA FX DEBT-C$ relinquishes early gain, ends lower

Thu Aug 6, 2009 4:30pm EDT
 
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 * C$ retreats from C$1.0687 session high
 * Oil prices weigh on Canadian dollar
 * Bond prices higher ahead of jobs data
 (Recasts)
 By Frank Pingue
 TORONTO, Aug 6 (Reuters) - Canada's currency closed lower
versus the greenback on Thursday as risk averse traders hedged
positions ahead of domestic jobs data on Friday that is
expected to show unemployment at an 11-year high.
 Canada's currency was also dragged down by oil prices that
ended lower after a back-and-forth session that at one point
had prices at their highest level since late June.
[ID:nSP359441]
 "Oil (prices) came back towards the end of the day but the
Canadian dollar failed to react to the last recovery in the oil
price," said Matthew Strauss, senior currency strategist at RBC
Capital Markets.
 "So risk aversion ... and position-squaring ahead of
tomorrow's data, and that's the reason why the Canadian dollar
didn't really react to the last move in the oil price."
 Markets expect Statistics Canada to report net job losses
of 17,500 for July, and an unemployment rate of 8.8 percent.
The data is due at 7:00 a.m. (1100 GMT).
 The Canadian dollar closed at C$1.0767 to the U.S. dollar,
or 92.88 U.S. cents, down from C$1.0701 to the U.S. dollar, or
93.45 U.S. cents, at Wednesday's close.
 The lower close erased gains made early in the session when
the latest North American economic data supported a view that
the worst of the world recession is over.
 While not typically a market mover, the Canadian dollar did
rally as high as C$1.0687 to the U.S. dollar, or 93.57 U.S.
cents, after data showed Canadian builders unexpectedly took
out more permits in June than in May [ID:nN06293340]
 The report came at the same time as U.S. data that showed
the number of people filing initial claims for jobless benefits
fell in the latest week. [ID:nN05350423].
 And shortly after that were upbeat comments from European
Central Bank President Jean-Claude Trichet, who said he sees a
gradual recovery in 2010. [ID:nFAE005213]
 BOND PRICES EDGE HIGHER
 Canadian bond prices ended higher alongside the bigger U.S.
Treasury market, snapping two straight sessions of declines, as
dealers were cautious ahead of Friday's jobs figures.
 The two-year Canadian bond edged up 3 Canadian cents to
C$99.08 to yield 1.458 percent, while the 10-year bond gained
33 Canadian cents to C$101.63 to yield 3.551 percent.
 The 30-year bond rose 80 Canadian cents to C$116.25 to
yield 4.023 percent. In the United States, the 30-year Treasury
yielded 4.546 percent.
 Canadian bonds outperformed U.S. Treasuries across the
curve. The Canadian 30-year bond was about 52.3 basis points
below the U.S. 30-year yield, compared with about 49.5 basis
points below on Wednesday.
 (Editing by Peter Galloway)