CANADA FX DEBT-C$ rises vs stronger US$ as China, U.S. data boost risk appetite

Fri Oct 14, 2016 5:04pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

(Adds strategist comment, CFTC data, updates prices to close)
    * Canadian dollar settles at C$1.3145, or 76.07 U.S. cents
    * Loonie gains 1.1 percent for the week
    * Bond prices lower across maturity curve

    By Alastair Sharp
    TORONTO, Oct 14 (Reuters) - The Canadian dollar gained
against a broadly stronger U.S. counterpart on Friday as
investor appetite for risk was restored due to Chinese and U.S.
economic data that was more robust than expected.  
    The loonie, as the currency is colloquially known, gained
more than 1 percent on the week, with much of that coming in the
last two days.
    But the bounce off lows last seen in March was an
opportunity to buy cheaper U.S. dollars for Bipan Rai, director
of foreign exchange strategy at CIBC Capital Markets.
    "A 2 cent move over the last couple of days really doesn't
seem that big in the grand scheme of things," he said,
suggesting the Bank of Canada may surprise with a
steeper-than-expected cut to growth forecasts when it presents a
quarterly economic update next week.
    In July, the central bank had anticipated 1.3 percent growth
in 2016 and 2.2 percent growth next year.
    "We do know that a revision to the forecast is coming, it's
all about the scale of that revision now," Rai said.
    The Canadian dollar settled at C$1.3145 to the
greenback, or 76.07 U.S. cents, stronger than Thursday's close
of C$1.3205, or 75.73 U.S. cents.
    The currency touched its strongest since Oct. 3 at C$1.3104
during the session.
    U.S. retail sales and producer prices in September supported
the view of a modest U.S. economic expansion, which helped both
    A pickup in China's consumer prices eased concerns about the
health of the world's second-largest economy after disappointing
trade numbers on Thursday. 
    Speculators cut bearish bets on the Canadian dollar,
Commodity Futures Trading Commission data showed. Net short
Canadian dollar positions dipped to 11,704 contracts in the week
ended Oct. 11 from 14,077 in the prior week.
    The loonie's normally tight link with the price of oil, one
of Canada's major exports, has weakened ahead of the U.S.
presidential election and a potential interest rate hike by the
Federal Reserve. 
    Sales of existing Canadian homes rose 0.8 percent in
September from August, a report from the Canadian Real Estate
Association showed. 
    Canadian government bond prices were lower across the yield
curve, with the two-year down 4.5 Canadian cents to
yield 0.621 percent and the benchmark 10-year 
declining 65 Canadian cents to yield 1.251 percent.

 (Additinal reporting by Fergal Smith; Editing by Phil Berlowitz
and David Gregorio)