CANADA FX DEBT-C$ softens as greenback rebounds, crude slides to multi-year low
(Adds closing figures, strategist comments and details) * Canadian dollar ends at C$1.3064 or 76.55 U.S. cents * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, Aug 13 (Reuters) - The Canadian dollar eased against a rebounding U.S. currency on Thursday as economic data helped drive the greenback higher and U.S. crude prices tumbled to 6-1/2-year lows. Market participants also took comfort from reassurances by China that it saw no basis to further depreciate its currency. The People's Bank of China said it would step in to stabilize prices, easing concerns that the yuan devaluation this week would trigger a currency war. In the United States, retail sales that rebounded 0.6 percent in July from June helped reaffirm expectations that the Federal Reserve could start raising interest rates as early as next month. Global markets have been anxious about the possibility that the falling yuan could derail the U.S. central bank's policy plans. "We're erring still on a September rate hike. This week's market news has not materially changed our thinking," said Amo Sahota, director at Klarity FX in San Francisco. The Canadian dollar finished at C$1.3064 to the greenback, or 76.55 U.S. cents, weaker than the Bank of Canada's official close on Wednesday of C$1.2973, or 77.08 U.S. cents. The loonie, which was weaker than many of its key currency counterparts, remained range-bound however, trading between $1.2960 and C$1.3090 on Thursday. U.S. crude settled 3 percent lower and set a new 6-1/2-year low at $41.91 on data that showed a big rise in key U.S. stockpiles. Canada is a major exporter of oil and the currency is typically sensitive to price moves in the commodity. "(The Canadian dollar) doesn't have that same whip-saw impact I would've expected to see with oil pushing below $42," said Sahota. "It feels like it's somewhat contained at the moment. ... I would expect that the loonie's going to give - because that's been the path of least resistance." Sahota said the market may also be proceeding more cautiously given this week's volatility. Canadian government bond prices were mixed across the maturity curve, with the two-year price rising 1.5 Canadian cents to yield 0.413 percent and the benchmark 10-year flat with a yield of 1.400 percent. The Canada-U.S. two-year bond spread widened to -29.6 basis points, while the 10-year spread widened to -78.9 basis points. (Reporting by Solarina Ho; Editing by Peter Galloway and Jonathan Oatis)
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