CANADA FX DEBT-C$ drops almost 1 pct, nears 2014 low

Fri Oct 3, 2014 4:42pm EDT
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* Canadian dollar at C$1.1259 or 88.82 U.S. cents
    * Bond prices mostly lower across the maturity curve

 (New throughout, updates prices, market activity, comments)
    By Leah Schnurr
    TORONTO, Oct 3 (Reuters) - The Canadian dollar lost nearly 1
percent against the greenback on Friday, coming within a hair of
touching its low for 2014 under pressure from disappointing
domestic data and better-than-expected U.S. jobs growth.
    After two sessions of consolidation, the loonie slid
decisively back through resistance at the C$1.12 level, making
for a more than six-month low. 
    "It's a bit of a perfect storm for the currency," said Mazen
Issa, senior Canada macro strategist at TD Securities in
    Canada unexpectedly posted a trade deficit in August as
exports dropped, while imports rose by the highest amount in
almost two years. 
    At the same time, U.S. job growth accelerated in September
and the unemployment rate fell below 6 percent, giving the
greenback a boost. Canada will not release its jobs figures for
September until next week. 
    The loonie touched a session low of C$1.1271, bringing it
within striking distance of 2014's low so far at C$1.1279, which
was seen in March.
    "We didn't quite get there (but) I don't think that takes
anything away from the marketplace at this time," said Amo
Sahota, director at Klarity FX in San Francisco.
    "Everything is still lined up in that direction. After the
head fake we got earlier in the week with the squeeze down
toward C$1.1078, C$1.1080, the resumption for the path of least
resistance is very, very prevalent."
    The Canadian dollar ended the North American
session at C$1.1259 to the greenback, or 88.82 U.S. cents,
weaker than Thursday's close of C$1.1163, or 89.58 U.S. cents. 
    The currency pairing likely still has higher to go, with  
technical targets though C$1.1280 up closer to C$1.1350, Sahota
    The Canadian dollar gave up 0.9 percent for the week, its
second week of declines in a row.
    The Canadian trade figures imply economic growth for the
third quarter that is now in the low 2 percent area, when it had
been previously tracking at 2.5 percent, said Issa.
    "It's quite a dent in what expectations were for the
quarter, but it certainly gives a lot of vindication for the
Bank of Canada to have pounded the table, so to speak, on being
cautious on the outlook," he said.
    Recent comments from Bank of Canada officials have
reinforced the market's view of the bank's neutral-to-dovish
policy stance. The central bank will release its next policy
statement later in the month, along with updated economic
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 1-1/2 Canadian
cents to yield 1.128 percent and the benchmark 10-year
 down 8-1/2 Canadian cents to yield 2.097 percent.

 (Editing by David Gregorio)