CANADA FX DEBT-C$ stronger as geopolitics boosts crude

Tue Nov 24, 2015 4:33pm EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Adds strategist comment, updates prices)
    * Canadian dollar settles at C$1.3309, or 75.14 U.S. cents
    * Bond prices mixed across the maturity curve; spreads

    By Alastair Sharp
    TORONTO, Nov 24 (Reuters) - The Canadian dollar strengthened
against the U.S. dollar on Tuesday, helped by a rally in crude
oil on heightened geopolitical tensions after Turkey shot down a
Russian warplane near the Syrian border.
    "Crude has been the catalyst, but the catalyst for crude has
been geopolitical tensions," said Jack Spitz, managing director
of foreign exchange at National Bank Financial.
    Oil prices jumped almost 3 percent to hit a two-week high,
while the loonie ducked under the C$1.33 level after touching
its weakest level in almost two months in the previous session.
    The Canadian dollar settled at C$1.3309 to the
greenback, or 75.14 U.S. cents, compared to Monday's official
close of C$1.3373, or 74.78 U.S. cents. 
    Spitz said the downing of the Russian plane had accelerated
a squaring of long U.S. dollar positions in a shortened week for
U.S. markets due to the Thanksgiving holiday on Thursday.
    The run-up in the greenback in recent weeks has been
encouraged by anticipation of a hike in U.S. interest rates.
    "I didn't see huge momentum in it today, but when the
markets are thin that can explain some of the whippy movements
that we've seen in Funds today," he said.
    U.S. crude prices settled up 2.7 percent to $43.11 a
barrel, while Brent crude Brent crude added 2.8
percent to $46.07. 
    The U.S. economy grew at a healthier clip in the third
quarter than initially thought, suggesting resilience that could
give the Federal Reserve confidence to raise interest rates next
month, although efforts by businesses to reduce an inventory
bloat had not been as aggressive as previously believed.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price up half a
Canadian cent to yield 0.620 percent and the benchmark 10-year
 down 2 Canadian cents to yield 1.614 percent.
    The Canada-U.S. two-year bond spread narrowed 1.3 basis
points to -31 basis points, while the 10-year spread was 1.5
basis points narrower at -62.3 basis points, as Treasuries
outperformed on the flight to quality.

 (Additional reporting by Fergal Smith; editing by Nick
Zieminski and Diane Craft)