CANADA FX DEBT-C$ hits 21-month low, weighed by softer jobs outlook

Tue Jul 2, 2013 5:01pm EDT
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* C$ at $1.0549 vs US$, or 94.80 U.S. cents
    * Falls to as low as C$1.0578, or 94.53 U.S. cents
    * Disparate outlook on job reports leaves C$ on shaky ground
    * U.S. dollar keeps gaining on speculation Fed will reduce

    By Alastair Sharp
    TORONTO, July 2 (Reuters) - The Canadian dollar slid to a
21-month low against its U.S. counterpart on Tuesday, hurt by
signs the Canadian economy is struggling even as U.S. growth
allows the Federal Reserve to consider reducing monetary
    Canada's currency at one point on Tuesday hit C$1.0578
against the greenback, or 94.53 U.S. cents, its weakest level
since Oct. 4, 2011.
    Analysts said the Canadian currency could face further
pressure at the end of the week, with employment data due out
for both the U.S. and Canadian labor markets.
    Canada is expected to have given up some 2,500 jobs in June
after notching oversized gains in the prior month, while the
much larger U.S. economy is seen adding 165,000 jobs. 
    "It can definitely get weaker, depending on how the data
shake out for the rest of the week," said Benjamin Reitzes, a
foreign exchange strategist at BMO Capital Markets. "The
momentum is against Canada at this point."
    The U.S. dollar rose against a swath of currencies on
Tuesday as a recent string of generally solid U.S. economic data
gave credence to the view that the Federal Reserve will scale
back its economic stimulus measures sooner than expected. 
    Economic growth surveys conducted in recent months show U.S.
growth is expected to outpace Canada's this year and next.
    U.S. new motor vehicle sales in June were poised to record
their strongest month in more than 5-1/2 years and factories
posted a second straight month of gains in new orders in May,
while home prices posted their biggest annual increase in more
than seven years in May, data showed on Tuesday. 
    The Canadian dollar ended the session trading at
C$1.0549 to the greenback, or 94.80 U.S. cents, compared with
C$1.0518, or 95.08 U.S. cents, at Friday's North American close.
    The loonie, as the currency is known, ended at C$1.0495 on
Monday, when Canadian trading desks were closed for the Canada
Day holiday.
    The loonie has shed value in recent weeks as the U.S.
Federal Reserve signals its intention to scale back asset
purchases that had supported equity and bond markets. 
    Meanwhile, uneven Canadian economic data has caused
investors to wonder how soon the Bank of Canada will act on its
long-held threat to raise interest rates.
    Prices for Canadian government debt were up across the
curve. The two-year bond was up 5 Canadian cents to
yield 1.199 percent, while the benchmark 10-year bond
 rose 25 Canadian cents to yield 2.413 percent.