CANADA FX DEBT-C$ retreats as investors consolidate; central banks eye action

Mon Nov 24, 2014 4:48pm EST
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(Adds comment, details, closing figures)
    * Canadian dollar at C$1.1289, or 88.58 U.S. cents
    * Bond prices higher across the maturity curve
    * Investors look to retail sales Tuesday, OPEC on Thursday

    By Solarina Ho
    TORONTO, Nov 24 (Reuters) - The Canadian dollar gave back
much of last week's gains against the greenback on Monday as
market participants consolidated after the loonie rallied on
Friday to touch a three-week high against the U.S. dollar on
above-forecast Canadian inflation data.
    The currency is expected to be under some pressure in the
near term and could see more volatility. Trading is expected to
thin out toward the latter half of this week with the U.S.
Thanksgiving holiday, but an OPEC meeting on Thursday and
quarterly gross domestic product data on Friday could be key
    "I think a lot of (today's move) is really just ... a
retracement of what we saw on Friday," said Greg Moore, senior
currency strategist at Royal Bank of Canada, noting that the
currency was trading within Friday's range of C$1.1191 and
    After Friday's CPI report, "today's move may be a little bit
of a rethink on what (it) could mean for Bank of Canada policy,"
he said. "It was close enough to the Bank of Canada's own
forecast for Q4 that it likely won't be enough to change their
policy stance at this point."
    The Canadian dollar, which was underperforming most
other key currencies, finished Monday's session at C$1.1289 to
the greenback, or 88.58 U.S. cents, weaker than Friday's North
American close at C$1.1239, or 88.98 U.S. cents.
     Overseas, a frenetic round of activity at central banks in
Asia and Europe suggested concern about growth will be met with
    "It's a mixed U.S. dollar environment with the European
strong and most of the growth currencies weak," said Camilla
Sutton, chief currency strategist at Scotiabank.  
    In commodity markets, oil prices slipped ahead of Thursday's
OPEC meeting, with markets uncertain whether producers would
agree on a meaningful output cut to support prices.
    "On Thursday - especially in an illiquid market, given that
the U.S. will be closed (for Thanksgiving) - we could see a
decent move in the Canadian dollar on the back of what happens
in the oil markets," Moore said.
    Investors are also waiting for Canadian retail sales data
for September to be released on Tuesday. It will be the final
key piece of economic data before the third-quarter gross
domestic product figures are released at the end of the week.
    Moore noted that both RBC and the consensus forecast for
third-quarter GDP were below the Bank of Canada's forecast of
2.3 percent, raising expectations of some pressure on the
    Canadian government bond prices were higher across the
maturity curve with the two-year adding 1.5 Canadian
cents to yield 1.058 percent, and the benchmark 10-year
 rising 23 Canadian cents to yield 1.981 percent.

 (Additional reporting by Andrea Hopkins; Editing by Peter
Galloway and Leslie Adler)