CANADA FX DEBT-C$ retreats as oil falls; OPEC, job numbers in focus

Thu Jun 4, 2015 5:07pm EDT
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(Updates throughout with additional details, FX commentary,
closing figures)
    * Canadian dollar at C$1.2504 or 79.97 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, June 4 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as oil prices sank more
than 2.5 percent ahead of Friday's OPEC meeting, and as
investors looked ahead to the two countries' Friday employment
reports for May.
    The price of crude, Canada's top export, fell for a second
straight day amid concerns of a global supply glut and that
rising European bond yields could hurt the availability of
speculative money invested in oil.
    The Organization of the Petroleum Exporting Countries (OPEC)
is widely expected to maintain a production target of 30 million
barrels per day, despite calls from some quarters to cut
supplies to support prices. 
    "What you have today is simply a reaction to the fall in oil
prices," said Adam Button, currency analyst at ForexLive in
Montreal. "Expectations (on OPEC) are extremely low for any
change, but it doesn't mean the rhetoric from OPEC won't create
waves in oil and by extension, the Canadian dollar."
    U.S. crude prices were down 2.78 percent at $57.98,
while Brent crude dropped 2.63 percent to $62.12.
    The Canadian dollar, which was weaker against other
major currencies, finished at C$1.2504 to the greenback, or
79.97 U.S. cents, its weakest level of the session and softer
than the Bank of Canada's official close of C$1.2453, or 80.30
U.S. cents on Wednesday.
    On the employment front, market participants are, on
average, expecting May numbers to show 225,000 jobs created in
the United States and 10,000 new jobs in Canada, according to a
Reuters poll.  
    Investors are hoping the labor market figures will offer
clues on the Federal Reserve and the Bank of Canada's monetary
policy thinking.
    "It's a three-pronged day ahead ... and promises a
tremendous amount of volatility," said Button, who expects a
rapid two-cent move in the loonie, if it manages to break out of
the recent C$1.2400 to C$1.2550 range.
    Canadian government bond prices were higher across the
board. The two-year price was up 6.5 Canadian cents
to yield 0.574 percent while the benchmark 10-year 
rose 34 Canadian cents to yield 1.742 percent.
    The Canada-U.S. two-year bond spread was -9.1 basis points,
while the 10-year spread was -57.0 basis points.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn and Steve