July 18, 2018 / 3:16 PM / 2 months ago

CANADA FX DEBT-C$ eases as strong U.S. dollar, lower commodity prices weigh

    * U.S. dollar up 0.1 percent vs CAD 
    * Spread between the U.S.-Canadian 10-year yields narrows
slightly

    By Gertrude Chavez-Dreyfuss
    July 18 (Reuters) - The Canadian dollar fell against the
U.S. dollar for a second straight session on Wednesday,
undermined by weaker commodity prices and broadly strong
greenback after bullish comments from U.S. Federal Reserve
Chairman Jerome Powell. 
    It was mostly a U.S. dollar-driven move, analysts said, as
it rose after Powell affirmed expectations of multiple interest
hikes if not this year, then in 2019.
    Powell, in testimony to the Senate Banking Committee, said
the U.S. economy is on the cusp of "several years" where the job
market remains strong and inflation stays around the Fed's 2
percent target. He discounted the risk that a trade war may
throw a global recovery off track.             
    He repeated the same comments before the U.S. House
Financial Services Committee on Wednesday.             
    In contrast, Canada is in the midst of global trade
pressures brought on by the United States, which analysts said
has the dimmed the outlook for the Canadian dollar.
    In late morning trading, the U.S. dollar was up 0.1 percent
at C$1.3208          against the Canadian unit. So far this
year, the Canadian dollar has been down 5.3 percent against a
strong U.S. currency.
    The U.S. dollar, meanwhile, was up 0.2 percent against a
basket of six major currencies at 95.152       .
    The Canadian dollar was also lower against the euro, which
rose 0.2 percent to C$1.5414          . Sterling, however, fell
0.2 percent to C$1.7264          .
    Weaker commodity prices also pressured the Canadian dollar,
with U.S. crude futures down 0.5 percent at $67.59 per barrel
      . Gold was down as well, falling 0.3 percent to $1,223.80
per ounce          . Silver tumbling more than 1 percent to
$15.435 per ounce          . 
    Meanwhile, Canadian government bond prices were lower  
across the curve in line with U.S. Treasuries.
    The two-year yield            rose to 1.924 percent,
compared with 1.918 percent late on Tuesday, while the 10-year
            was up slightly at 2.129 percent from Tuesday's 
2.123 percent.
    The spread between the U.S. 10-year Treasury and Canadian
10-year yields has narrowed slightly to 73.12 basis points
             , but the trend has been widening since the
beginning of the year in favor of the U.S. dollar. 

 (Reporting by Gertrude Chavez-Dreyfuss in New York
Editing by Nick Zieminski and Marguerita Choy)
  
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