CANADA FX DEBT-C$ firms on rising oil; jobs data in focus

Thu Oct 8, 2015 5:05pm EDT
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(Updates with strategist comment, market reaction, details)
    * Canadian dollar at C$1.3017 or 76.82 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, Oct 8 (Reuters) - The Canadian dollar strengthened
against the greenback on Thursday, powered by oil prices that
surged to three-month highs.
    The move in crude, a major Canadian export, came after a
closely watched oil forecaster predicted prices would rise to
$75 a barrel over the next two years. U.S. crude oil futures
 settled up $1.62, or 3.39 percent, at $49.43 after
touching $50.07. 
    The Canadian dollar ended at C$1.3017 to the
greenback, or 76.82 U.S. cents, stronger than the Bank of
Canada's official close of C$1.3065, or 76.54 U.S. cents on
    The currency traded between C$1.2979 and C$1.3074 during the
    "It's very much a reflection of what's going on in WTI (West
Texas Intermediate crude), trading through $50 for the first
time in a few months," said Jack Spitz, managing director of
foreign exchange at National Bank Financial, adding that the
move also inspired some offers in USD/CAD.
    "Once again, as we saw yesterday and today, there's been
some position squaring below C$1.30. With respect to the lead
into Canada unemployment numbers, it's not surprising to see
some of the short USD/CAD positions get squared as well."
    Canadian labor data for September is due on Friday at 8:30
a.m. (1230 GMT). Economists polled by Reuters are expecting
10,000 jobs were created last month and an unemployment rate of
6.9 percent. 
    Spitz, who is expecting a weaker-than-consensus number, said
the loonie was unlikely to break through the mid-C$1.29 level
over the next day or so unless the data surprised on the upside
and crude oil continued its rally.
    The loonie was also aided by a softer U.S. dollar, which
eased after Federal Reserve meeting minutes for September
underscored the growing view that the U.S. central bank is
unlikely to raise interest rates this year. 
    In economic data news, new home prices in Canada rose by 0.3
percent in August from July on continued strength in Ontario.
Market analysts polled by Reuters had expected a 0.2 percent
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year price down 4.5
Canadian cents to yield 0.554 percent, while the benchmark
10-year was down 46 Canadian cents to yield 1.506
    The Canada-U.S. two-year bond spread was -8.3 basis points,
while the 10-year spread was -60.2 basis points.

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