CANADA FX DEBT-C$ slips as oil price, greenback reverse course

Thu May 14, 2015 4:39pm EDT
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(Updates throughout with strategist comment, details and
closing figures)
    * Canadian dollar at C$1.1999 or 83.34 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, May 14 (Reuters) - The Canadian dollar gave back
session gains against its U.S. counterpart on Thursday,
weakening on the back of softer crude prices and a U.S. dollar
that pared earlier losses.
    The U.S. dollar, which has been bruised by a string of soft
U.S. data that has deflated expectations of a rosier second
quarter, was off the day's lows, but headed for another session
loss against a basket of currencies.
    "Some people thought maybe USD was a little oversold. We've
had quite a large swing over the last three to four weeks," said
Rahim Madhavji, President at
    "People are trying to buy a little bit on dips, because we
hit close to a recent low earlier this morning ... It's all
about the economic data that's coming out and it doesn't look so
good for the U.S."
    The price of oil, a major Canadian export, softened in
choppy trading on ample global supplies. U.S. crude 
prices were down 1.24 percent to $59.75, while Brent crude
 lost 0.34 percent to $66.58. 
    The Canadian dollar ended at C$1.1999 to the
greenback, or 83.34 U.S. cents, weaker than the Bank of Canada's
official close of C$1.1967, or 83.56 U.S. cents, on Wednesday.
    The currency was well off the C$1.1920 hit earlier, its
strongest level since mid-January. Its weakest level was
    Madhavji expects USD/CAD to remain rangebound between C$1.19
and C$1.23 over the next couple of months as investors wait for
more economic data before making an assessment on the health of
the U.S. economy and its implications for when the Federal
Reserve will finally hike interest rates.
    Concerns have grown as second-quarter data, including April
retail sales figures on Wednesday and U.S. producer prices on
Thursday, have underwhelmed. 
    A bright spot was an unexpected fall in the number of
Americans filing new claims for unemployment benefits,
suggesting the job market was still stable despite the recent
sluggish economic data. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 5 Canadian cents
to yield 0.671 percent and the benchmark 10-year 
rising 22 Canadian cents to yield 1.807 percent.
    The Canada-U.S. two-year bond spread was 12.7 basis points,
while the 10-year spread was -43.4 basis points.

 (Editing by Peter Galloway; Editing by Meredith Mazzilli)