CANADA FX DEBT-C$ weakens as oil drops, investors shed risky assets

Mon Feb 8, 2016 9:38am EST
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Canadian dollar at C$1.3949 or 71.69 U.S. cents
    * Bond prices higher across the maturity curve
    * Canada 10-yr yield hit new record low at 1.056 percent

    TORONTO, Feb 8 (Reuters) - The Canadian dollar lost further
ground against its U.S. counterpart on Monday as a sell-off in
stocks and a drop in oil prices weighed on the risk-sensitive
commodity currency, while Canada's 10-year yield hit a new
record low.
    Investors shed risky assets as worries persisted over the
pace of global growth.    
    U.S. crude prices were down 1.52 percent at $30.42 a
barrel after a Saudi-Venezuela meeting showed few signs that
steps would be taken to boost prices. 
    On Friday, weak Canadian jobs data underlined the economy's
struggles to cope with an oil shock, while U.S. wage growth
helped stabilize the greenback.
    Attention has shifted to U.S. Federal Reserve Chair Janet
Yellen's testimony on Wednesday amid doubts about the Fed's
ability to raise rates this year. [FED/DIARY}
    At 9:20 a.m. EST (1420 GMT), the Canadian dollar 
was trading at C$1.3949 to the greenback, or 71.69 U.S. cents,
weaker than Friday's official close of C$1.3908, or 71.90 U.S.
    The currency's strongest level of the session was C$1.3841,
while it hit its weakest since Feb. 3 at C$1.3978.
    The value of Canadian building permits surged 11.3 percent
in December, topping economists' forecasts for a gain of 5.6
    Speculators have trimmed bearish bets against the Canadian
dollar, a week after they hit their highest in five months.
    Net short Canadian dollar positions decreased to 52,420
contracts in the week ended Feb. 2 from 66,819 in the prior
week, Commodity Futures Trading Commision data showed on Friday.
    Canadian government bond prices were higher across the
maturity curve amid a flight to safety, while the curve
flattened as the long-end outperformed.
    The two-year price rose 3 Canadian cents to yield
0.355 percent and the benchmark 10-year was up 55
Canadian cents to yield 1.072 percent. The 10-year yield hit a
new record low at 1.056 percent.
    The Canada-U.S. two-year bond spread was 1.9 basis points
less negative at -33.6 basis points as Treasuries outperformed
at the front of the curve.
    A speech by Bank of Canada Deputy Governor Timothy Lane on
monetary policy and financial stability will be published at
11:50 a.m. EST (1650 GMT).
    Remarks will likely reflect the Bank of Canada's view that
macro prudential policies are the best way to address financial
vulnerability, according to a research note on Monday from RBC
Capital Markets.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)