CANADA FX DEBT-C$ hits weakest level in nearly a month as greenback surges

Tue Mar 10, 2015 9:54am EDT
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* Canadian dollar at C$1.2635, or 79.14 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, March 10 (Reuters) - The Canadian dollar on Tuesday
fell to its weakest level in nearly a month against the soaring
U.S. currency, as confusion about the Bank of Canada's stance
contrasted with growing confidence that the U.S. Federal Reserve
will start lifting rates by mid-year.
    The Canadian currency has been hurt by slumping oil prices
and then by the central bank's shock January rate cut response.
Many strategists admit to being unsure of the bank's next move.
    "Confidence is not a thing you really associate with the
Bank of Canada outlook these days," said Shaun Osborne, chief
currency strategist at TD Securities.
    Meanwhile, another stellar set of U.S. jobs data on Friday
and a subsequent chorus of hawkish Fed policymaker comments has
pushed the greenback to multi-year highs against the euro and
    The Canadian dollar was at C$1.2635 to the
greenback, or 79.14 U.S. cents, in North American morning trade,
weaker than Monday's close of C$1.2596, or 79.39 U.S. cents. 
    Earlier Tuesday, the loonie fell to C$1.2683, or 78.85 U.S.
cents, its weakest level since Feb. 11.
    Oversupply and weak demand hobbled oil prices, which also
hurt the currency of Canada, a major oil producer. 
    Further currency weakness is likely, as the impact of cheap
oil likely flows through to economic data in coming months.
    "It's very difficult to see the Canadian dollar recovering
significantly anytime soon without some pretty material things
changing," Osborne said. "That is to say the economy picks up
significantly or we see a big turnaround in crude prices that
gives the currency a psychological lift at least." 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.5 Canadian
cents to yield 0.587 percent and the benchmark 10-year
 up 49 Canadian cents to yield 1.521 percent.

 (Reporting by Alastair Sharp Editing by W Simon)