CANADA FX DEBT-C$ hits 6-month low as GDP lifts greenback, bank policies diverge

Fri Sep 26, 2014 5:03pm EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Canadian dollar closes at C$1.1155 or 89.65 U.S. cents
    * Bond prices lower across the maturity curve

    By Solarina Ho
    TORONTO, Sept 26 (Reuters) - The Canadian dollar fell to a
deeper six-month low against its U.S. counterpart on Friday as
the greenback extended its longest win streak in more than four
decades, bolstered by upwardly revised U.S. gross domestic
product data.
    The U.S. economy grew at its fastest pace in 2-1/2 years in
the second quarter, data showed on Friday, with all sectors
contributing to the jump in output. Analysts said the figures
provided a bullish signal for the remainder of the year.
    "It's the greenback right across the board ... it just seems
like the momentum is really strong and the market's going with
it," said Amo Sahota, director at Klarity FX in San Francisco.
    "The market was satisfied with this morning's GDP
data...There's been too many surprises, too many unknowns out
there, so to have it validated for the marketplace, I think that
helped lift the U.S. dollar."
    The Canadian dollar, which was outperforming most
major currencies, finished the week at C$1.1155 to the
greenback, or 89.65 U.S. cents, after trading as soft as
C$1.1169, or 89.53 U.S. cents, during the session. 
    It was its weakest close since March 26 and nearly half a
cent off Thursday's finish of C$1.1108, or 90.03 U.S. cents. 
    The Canadian dollar has retreated about 2 percent over the
past six sessions while the U.S. dollar was headed for its 11th
straight weekly gain against a basket of currencies, its longest
winning streak since 1971. 
    For the last several months, the U.S. dollar has been
propelled by growing expectations that the U.S. Federal Reserve
will start to tighten monetary policy, while central banks
elsewhere, including Canada, stay where they are.
    The Bank of Canada made a series of comments this week that
signaled to markets it was in no rush to raise interest rates.
    "You'll see probably developing in the coming months, a
policy divergence, where the Federal Reserve is gearing up
toward hiking rates next year, while the Bank of Canada is
really comfortable basically saying 'we're happy where we are',"
said Charles St-Arnaud, Canadian economist and currency
strategist at Nomura Securities International in New York.
    All eyes will be on Tuesday's gross domestic product numbers
for July, the next key economic data for Canada. Canadian trade
data is due next Friday.
    "Anything which relates to growth is going to be the focus
point," Sahota said. "I think the combination of both of those
will be really important figures as we get closer and closer to
the next Bank of Canada meeting on Oct. 22."
    Canadian government bond prices were generally lower across
the maturity curve, with the two-year off 2.7
Canadian cents, yielding 1.133 percent, and the benchmark
10-year down 17 Canadian cents, yielding 2.168

 (Reporting by Solarina Ho; Editing by Peter Galloway)