August 4, 2017 / 9:38 PM / 3 years ago

CANADA FX DEBT-C$ falls as trade data weighs, U.S. jobs boost greenback

 (Adds strategist comment, updates prices)
    * Canadian dollar at C$1.2650, or 79.05 U.S. cents
    * Loonie touches its weakest since July 18 at C$1.2667
    * Bond prices move lower across a steeper yield curve
    * Canada adds 10,900 jobs in July; trade deficit jumps in

    By Alastair Sharp
    TORONTO, Aug 4 (Reuters) - The Canadian dollar notched its
weakest close in more than two weeks against its U.S.
counterpart on Friday as the greenback surged after a strong
U.S. jobs report and domestic data showed a jump in Canada's
trade deficit.
    "It's the long-anticipated corrective bounce in
dollar-Canada", pushed mostly from the greenback side in
reaction to the U.S. jobs data, said Bipan Rai, a senior macro
strategist at CIBC Capital Markets.
    At 4 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2650 to the greenback, or 79.05 U.S. cents, down
0.5 percent. 
    The loonie fell 1.7 percent against the greenback this week,
but is still up nearly 9 percent since early May. 
    Canada's economy added 10,900 jobs in July, mostly in
full-time employment, Statistics Canada said, while the jobless
rate fell to its lowest since October 2008.             
    But the country's trade deficit swelled to C$3.60 billion in
June from a revised C$1.36 billion shortfall in May, with a drop
in energy shipments weighing on exports.             
    "Typically, the market doesn't pay that much attention to
the trade data," said TD Securities senior rates strategist
Andrew Kelvin. "But this is an awfully big downside surprise"
    The U.S. dollar        rallied against a basket of major
currencies after U.S. employers hired more workers than expected
in July and raised their wages, signs of labor market tightness
that is likely to clear the way for the Federal Reserve to
announce a plan next month to start shrinking its massive bond
    Speculators increased bullish bets on the loonie to the
highest level since January 2013, according to data from the
U.S. Commodity Futures Trading Commission and Reuters
calculations. Canadian dollar net long positions rose to 40,638
contracts as of Aug. 1 from 26,613 contracts a week earlier.
    The currency's strongest level of the session was C$1.2554,
while it touched its weakest since July 18 at C$1.2667.
    Still, it has rallied more than 9 percent since early May,
helped by the Bank of Canada raising interest rates last month
for the first time in nearly seven years.
    Prices of oil, one of Canada's major exports, rose on Friday
but were down on the week, pressured by rising OPEC exports and
strong U.S. output.      
    Canadian government bond prices fell across a steeper yield
curve, with the two-year            price off 1 Canadian cent to
yield 1.243 percent and the 10-year             down 24 Canadian
cents to yield 1.921 percent.

 (Additional reporting by Fergal Smith; Editing by Sandra Maler)
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