CANADA FX DEBT-C$ firms as greenback stays soft, crude rises

Tue Mar 24, 2015 9:59am EDT
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* Canadian dollar at C$1.2482, or 80.12 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, March 24 (Reuters) - The Canadian dollar extended
its recent gains against its U.S. counterpart on Tuesday as
continued weakness in the greenback lifted dollar-priced crude
oil, a key Canadian export, and other commodities.
    Speculation since last week's U.S. Federal Reserve statement
that the Fed might delay hiking interest rates has put the U.S.
currency under pressure.
    "The general trend here is probably still geared toward U.S.
dollar softening a bit more," said Shaun Osborne, chief currency
strategist at TD Securities. 
    "The selloff in the U.S. dollar post-FOMC was quite telling
overall from a price action point of view. It does suggest we've
probably seen a bit of a peak in the U.S. dollar here."
    The greenback briefly pared losses against a basket of
currencies after data showed U.S. consumer prices rebounded in
February, with gasoline prices rising for the first time since
    But it then retraced earlier losses and sent Brent crude
above $56 a barrel, and U.S. crude up just under $48 a barrel,
despite signs of slowing economic growth in China as well as
Saudi Arabian comments that the country's oil production is
closing in on a record high. 
    The Canadian dollar was at C$1.2482 to the
greenback, or 80.12 U.S. cents, at 9:18 a.m. (1318 GMT),
modestly stronger than Monday's Bank of Canada close of
C$1.2499, or 80.01 U.S. cents.
    Earlier in the session, it touched C$1.2428, or 80.36 U.S.
cents, and Osborne speculated in the coming days, the loonie
could test highs hit in February, when it strengthened to the
mid-C$1.23 level.
    With little on the domestic data front until next week, a
speech by Bank of Canada Governor Stephen Poloz on Thursday will
be a key focus for market watchers.
    "Given the growth challenges we're likely to see for the
Canadian economy, it's quite likely rates will have to move a
little bit lower at least," Osborne said. "That is going to be
drag on Canadian dollar performance, but not for the moment," he
added, noting that the central bank will likely wait until first
quarter data is released in May before moving on rates.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 1 Canadian
cent to yield 0.461 percent and the benchmark 10-year
 flat, yielding 1.308 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)