CANADA FX DEBT-C$ hits 1-week low as $50 level caps oil

Thu Jun 2, 2016 4:32pm EDT
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(Adds analyst's comment, details on OPEC meeting, updates
    * Canadian dollar at C$1.3105, or 76.31 U.S. cents
    * Loonie touched its weakest since May 24 at C$1.3144
    * Bond prices higher across the maturity curve

    By Fergal Smith
    TORONTO, June 2 (Reuters) - The Canadian dollar weakened to
a one-week low against its U.S. counterpart on Thursday as
investors braced for upcoming economic data from the United
States and Canada and as the $50 threshold continued to cap
crude oil prices. 
    Oil edged higher after data showing a weekly drawdown in
U.S. crude stockpiles offset a decision by the Organization of
the Petroleum Exporting Countries not to set a ceiling for its
production. U.S. crude oil futures settled up 16 cents at
$49.17 a barrel. 
    "The fact that oil appears to have topped out at {$)50 is
increasingly creating a perception that risks are skewed to the
downside for the Canada dollar," said Daniel Katzive, head of FX
strategy North America at BNP Paribas.
    Recent weaker-than-expected Canadian data has also been a
headwind for the currency, he said.
    Data on Tuesday showed economic growth accelerated at a
weaker pace than expected in the first three months of the year
and lost momentum at the end of the quarter, boding poorly for a
second quarter that is expected to be further affected by
Alberta's wildfires. 
    U.S. data on Thursday signaled a tightening in the labor
market. It came one day before the release of the U.S.
employment report for May. 
    Expectations that Friday's U.S. jobs data will set the stage
for an interest rate hike this summer by the Federal Reserve
helped support the greenback against commodity exporter
currencies such as the Canadian dollar, said Katzive.
    Canadian trade data is also due on Friday, expected to show
narrowing in the trade deficit. 
    The Canadian dollar ended at C$1.3105 to the
greenback, or 76.31 U.S. cents, weaker than Wednesday's close of
C$1.3067, or 76.53 U.S. cents.
    The currency's strongest level of the session was C$1.3055,
while it touched its weakest since May 24 at C$1.3144.
    The loonie is expected to weaken in the near-term on
prospects of slower economic growth and a U.S. interest rate
hike this month or next, a Reuters poll found, but an eventual
oil price recovery is set to bolster the currency over the
longer term. 
    Canadian government bond prices were higher across the
maturity curve in sympathy with U.S. Treasuries. The two-year
 price rose 5 Canadian cents to yield 0.565 percent
and the benchmark 10-year climbed 45 Canadian cents
to yield 1.254 percent.    
    The 10-year yield hit its lowest since April 18 at 1.252

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli, Toni