CANADA FX DEBT-C$ strengthens as oil rebounds, bonds fall

Thu Jan 22, 2009 5:07pm EST
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* C$ edges up as oil rebounds to settle higher

* Big drop in Nov retail sales pressured market early

* BoC forecast of deep, short recession has little impact

* Bonds hurt by supply concerns due to stimulus spending

By Jennifer Kwan

TORONTO, Jan 22 (Reuters) - The Canadian dollar edged higher against the U.S. currency on Thursday, rebounding from early weakness as the price of oil, a major Canadian export, bounced higher.

The currency was at C$1.2537 to the U.S. dollar, or 79.76 U.S. cents, up from C$1.2558 to the U.S. dollar, or 79.63 U.S. cents, on Wednesday. It hit a low of C$1.2741 to the U.S. dollar, or 78.49 U.S. cents, early in the session after figures showed Canadian retail sales were worse than expected in November [ID:nN22].

In the United States weekly jobless claims rose more than expected, while housing starts and permits fell to a record low in December. [ID:nN22528164]

"We saw some strong risk aversion backed by both the very disappointing U.S. data and Canadian data and, consequently, the Canadian dollar selling off," said Matthew Strauss, senior currency strategist at RBC Capital Markets.   Continued...