CANADA FX DEBT-C$ ends weaker but comfortably off one-week low

Tue Nov 17, 2009 4:29pm EST
 
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 * C$ ends at C$1.0511
 * Turnaround in oil prices helps pare losses
 * Bond prices higher ahead of CPI data
 (Recasts to close)
 By Frank Pingue
 TORONTO, Nov 17 (Reuters) - Canada's dollar closed lower on
Tuesday but a backdrop of stronger equities and firm prices for
key Canadian exports helped it reverse much of an earlier drop
to its lowest level in a week.
 The lower close snapped a two-session string of gains for
the domestic currency. The unit is often influenced by
commodity prices given the nature of Canada's exports, and by
equities, an indication of investor risk appetite.
 Weaker equities overnight and lower commodity prices had
initially dragged the Canadian dollar down to C$1.0619 to the
U.S. dollar, or 94.17 U.S. cents, its lowest level since Nov.
9.
 But North American equities managed to end higher, notably
a 1 percent gain by the S&P/TSX composite index .GSPTSE. Oil
prices also turned around and helped open the door to Canadian
dollar buying. [.TO]
 "All those things that we look at for direction in Canada
came back a bit after things were looking pretty bleak in the
morning, and Canada was able to rally a bit," said Steve
Butler, director of foreign exchange trading at Scotia
Capital.
 The Canadian dollar closed at C$1.0511 to the U.S. dollar,
or 95.14 U.S. cents, down from C$1.0471 to the U.S. dollar, or
95.50 U.S. cents, at Monday's close.
 Oil prices managed to rise more than 1 percent as demand
for oil products supported crude, while gold ended a shade
higher. [O/R] [GOL/]
 BOND PRICES HIGHER
 Domestic bond prices, with no Canadian data to influence
investor sentiment, ended higher across the curve alongside the
bigger U.S. Treasury market. [US/]
 Canadian bonds may get some domestic influence on Wednesday
from the consumer prices data due at 7:00 a.m. (1200 GMT). The
report is expected to show core inflation, which strips out
energy and other volatile items, was flat in October.
[ID:nN1721923]
 The two-year Canada bond ended up 6 Canadian cents at
C$99.88 to yield 1.310 percent, while the 30-year bond rose 35
Canadian cents to C$118.30 to yield 3.908 percent.
 Canadian bonds outperformed U.S. Treasuries across much of
the curve. The Canadian 10-year yield was 4.70 basis points
above its U.S. counterpart, down from 4.80 basis points on
Monday.
 (Editing by Jeffrey Hodgson)