CANADA FX DEBT-C$ weakens to 1-week low as oil prices fall

Thu Mar 24, 2016 9:34am EDT
Email This Article |
Share This Article
  • Facebook
  • LinkedIn
  • Twitter
| Print This Article
[-] Text [+]

* Canadian dollar at C$1.3291, or 75.24 U.S. cents
    * Currency touches its weakest since March 16 at C$1.3292
    * Bond prices mixed across flatter maturity curve

    TORONTO, March 24 (Reuters) - The Canadian dollar weakened
to a fresh one-week low against its U.S. counterpart on Thursday
as lower oil prices weighed, while Federal Reserve rate hike
speculation added to pressure on the risk-sensitive
commodity-linked currency.
    The currency has weakened 2.8 percent since touching last
week its strongest in nearly five months at C$1.2924.
    Oil headed for its biggest weekly slide in two months,
dented by record-high stockpiles in the United States and a
stronger dollar.
    U.S. crude prices were down 3.22 percent to $38.51 a
    The greenback climbed for a fifth consecutive day
against a basket of major currencies as investors moved to price
in the possibility of two U.S. rate hikes this year.
    However, a drop in shipments of U.S. core capital goods
could prompt economists to trim U.S. first-quarter GDP growth
    At 9:19 a.m. EDT (1319 GMT), the Canadian dollar 
was trading at C$1.3291 to the greenback, or 75.24 U.S. cents,
weaker than Wednesday's close of C$1.3214, or 75.68 U.S. cents.
    The currency's strongest level of the session was C$1.3201,
while it touched its weakest since March 16 at C$1.3292.
    A stimulus budget from Canada's new Liberal government,
combined with a modest recovery in oil and non-commodity
exports, makes it likely the Bank of Canada's next move will be
an interest rate hike rather than a cut. 
    However, the fiscal measures announced this week had little
impact on the currency, with the C$29.4 billion shortfall close
to what analysts had expected. 
    Canadian government bond prices were mixed across the
maturity curve, with the two-year price flat to yield
0.561 percent and the benchmark 10-year rising 10
Canadian cents to yield 1.236 percent.
    The curve flattened in sympathy with U.S. Treasuries, as the
spread between the 2-year and 10-year yields narrowed by 1.2
basis points to 67.5 basis points, indicating outperformance for
longer-dated maturities. 

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)