May 7, 2009 / 1:49 PM / 8 years ago

CANADA FX DEBT-C$ little changed after hitting 6-month high

* C$ rallies as high as 85.99 U.S. cents

* Higher oil prices offer some support

* Bond prices down on U.S. data

By Frank Pingue

TORONTO, May 7 (Reuters) - The Canadian dollar was little changed versus the U.S. dollar on Thursday morning as the rise in the price of oil, a key Canadian export, was not enough to spark a move ahead of Friday’s Canadian and U.S. jobs data.

The Canadian jobs data due on Friday is expected to show the economy shed 50,000 jobs in April while unemployment rose to 8.3 percent, according to a Reuters survey. But the data could be overshadowed as it will be followed shortly after by a U.S. jobs report.

“The market isn’t quite sure where to go from here and of course this is the day when you’d expect that standing in front of the U.S. payrolls numbers,” said Eric Lascelles, chief economics and rates strategist at TD Securities.

At 9:35 a.m. (1335 GMT), the Canadian unit was at C$1.1661 to the U.S. dollar, or 85.76 U.S. cents, down from C$1.1658 to the U.S. dollar, or 85.78 U.S. cents, at Thursday’s close.

Earlier, it rose as high as C$1.1629 to the U.S. dollar, or 85.99 U.S. cents, which marked its highest level since Nov. 6.

An increase in the price of oil, which rose toward $58 a barrel and hit its highest level in 2009, lent some support to the Canadian dollar’s earlier rise to a six-month high.

For the rest of the session, the domestic currency’s moves could be dictated by investors positioning ahead of Friday’s key data, which some say could ultimately lend a boost to the currency even if the domestic numbers are weak.

“The Canadian numbers could be fairly weak whereas the U.S. might surprise to the upside and that potential does actually argue that we could see a softer Canadian dollar tomorrow,” said Lascelles.

“But those traditional relationships don’t always hold because frankly if the U.S. were to get better (than expected data) it might just be a further unwind of the safe haven effect which could ultimately weaken the (U.S.) dollar.”

BOND PRICES LOWER

Canadian bond prices were down across the curve, tracking the bigger U.S. Treasury market, after data showed a large drop in filings for U.S. unemployment benefits [ID:nN07289463]

“It looks like (bonds) are keying off the jobless claims which came in notably lower,” said Lascelles.

The benchmark two-year Canadian government bond was off 4 Canadian cents at C$100.41 to yield 1.048 percent, while the 10-year bond dropped 45 Canadian cents to C$105.40 to yield 3.112 percent.

The 30-year bond was off 50 Canadian cents at C$118.65 to yield 3.901 percent. (Editing by Jeffrey Hodgson)

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