CANADA FX DEBT-C$ retreats more than 1 pct in post-Fed correction

Thu Mar 19, 2015 9:54am EDT
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* Canadian dollar at C$1.2717 or 78.63 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, March 19 (Reuters) - The Canadian dollar lost a
significant chunk of the hefty gains it made the previous day
against the greenback on Thursday as market participants bought
back the U.S. dollar and as crude prices softened.
    The U.S. dollar had tumbled against a range of currencies on
Wednesday after the U.S. Federal Reserve gave a much more
cautious statement on raising interest rates than anticipated.
    "(Yesterday) was a large 2.2 percent move in the Canadian
dollar against the U.S. dollar. We've rewound about half of that
- that was actually a pretty sharp correction," said Mark
Chandler, head of Canadian fixed income and currency strategy at
RBC Capital Markets.
    He noted, however, that the Fed's stance is still tighter
than the Bank of Canada's. 
    "You have two central banks, both in data-dependency mode,
one with a tightening bias, and one with an easing bias," he
said. "Ultimately, it's going to weigh on Canadian dollar,
especially with softer oil prices."
    The Canadian dollar, which was performing more
robustly than many of its peers, was trading at C$1.2717 to the
greenback, or 78.63 U.S. cents, more than 1 percent weaker than
Wednesday's close of C$1.2570, or 79.55 U.S. cents.
    The currency was also hurt by another drop in the price of
oil, a key Canadian export. Brent crude slipped below $55 a
barrel after Kuwait said OPEC had no choice but to keep
production steady, renewing market concerns about a global oil
surplus. U.S. crude sank nearly 4 percent to below $43, near
six-year lows. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2 Canadian cents
to yield 0.474 percent and the benchmark 10-year 
climbing 9 Canadian cents to yield 1.314 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)