January 9, 2020 / 11:02 PM / 6 months ago

CANADA FX DEBT-Canadian dollar hits near 2-week low ahead of key jobs data

 (Adds strategist quotes, details; updates prices)
    * Canadian dollar falls 0.1% against the greenback
    * Loonie touches its weakest since Dec. 27 at 1.3104
    * Price of U.S. oil declines 0.1%
    * Canadian bond prices rise across a flatter yield curve 

    By Fergal Smith
    TORONTO, Jan 9 (Reuters) - The Canadian dollar weakened to a
near two-week low against its U.S. counterpart on Thursday as
the greenback broadly rose, but the loonie clawed back some of
its decline ahead of the release of crucial employment data on
Friday.
    The December jobs report could help guide expectations for
the Bank of Canada interest rate outlook. Data for November
showed that Canada's economy shed more than 70,000 positions,
the most for any month since the global financial crisis.
    "The Canadian jobs data has a well-earned reputation as a
wild card," said Adam Button, chief currency analyst at
ForexLive. "Part of the volatility on Thursday was a reluctance
by traders to take sides ahead of the number."
    Bank of Canada Governor Stephen Poloz said on Thursday that
potential downside risks from global trade friction seem to have
eased, although much uncertainty remains around implications for
Canada's economy, which was hurt by temporary factors in recent
months.                 
    "There is a sense on Bay Street (Toronto's financial
district) that the Canadian economy is soft and that the Bank of
Canada is more likely to cut rates than hike, yet nothing we
have heard from the Bank of Canada has confirmed that," Button
said.
    The U.S. dollar        rose against a basket of major
currencies as the United States and Iran moved away from an
all-out conflict, prompting investors to take on more risk and
shift focus to an upcoming U.S.-China trade deal and a U.S.
non-farm payrolls report.             
    At 5 p.m. (2200 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3055 to the greenback, or 76.60 U.S.
cents. The currency touched its weakest intraday level since
Dec. 27 at 1.3104.    
    The loonie's decline came as oil prices added to sharp
losses in the previous session. U.S. crude oil futures       
settled 0.1% lower at $59.56 a barrel. 
    In addition, domestic data showed that housing starts fell
3% in December and the value of building permits fell by 2.4% in
November.                             
     The Canadian dollar, last year's top-performing G10
currency, will shift into a sideways trading pattern this year
as the domestic economy softens and the recent boost from easing
trade tensions fades, a Reuters poll showed.             
    Canadian government bond prices were higher across a flatter
yield curve on Thursday in sympathy with U.S. Treasuries. The
10-year             rose 25 Canadian cents to yield 1.605%.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Dan
Grebler)
  
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