April 7, 2020 / 8:44 PM / 4 months ago

CANADA FX DEBT-Canadian dollar notches 11-day high on coronavirus optimism

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.9% against greenback
    * Loonie touches its strongest since March 27 at 1.3945
    * Price of U.S. oil tumbles 9.4%
    * Canadian bond yields rise across a steeper curve

    By Fergal Smith
    TORONTO, April 7 (Reuters) - The Canadian dollar
strengthened to an 11-day high against its U.S. counterpart on
Tuesday as hopes rose that the spread of the coronavirus
pandemic was slowing and the greenback lost ground against a
basket of major currencies.
    At 4:20 p.m. (2020 GMT), the Canadian dollar        was
trading 0.9% higher at 1.3990 to the greenback, or 71.48 U.S.
cents.
    The currency touched its strongest intraday level since
March 27 at 1.3945, while the one-month rate for bankers'
acceptances, a measure of Canadian financial system stress, was
lower for the eighth straight day at 0.8%.
    "We have seen a little bit more positive risk sentiment in
the marketplace," said Amo Sahota, director at Klarity FX in San
Francisco.
    Also helping the loonie has been "rotation out of the big
U.S. dollar into other currencies," Sahota said.
    World stock markets          rose, although Wall Street gave
up its earlier gains, and the U.S. dollar weakened as signs of
progress against the coronavirus in both Europe and the United
States and some more liberal helpings of stimulus supported risk
appetite.             
    Canada runs a current account deficit and is a major
producer of commodities, including oil, so the loonie tends to
be sensitive to the global flow of trade and capital.
    U.S. crude oil futures        settled 9.4% lower at $23.63 a
barrel in the face of swelling crude supplies and weak fuel
demand because of the coronavirus pandemic, while investors also
grew cautious over expectations that the world's biggest
producers would quickly agree on output cuts.             
    Canadian purchasing activity contracted at a pace that was
much weaker than expected in March, Ivey Purchasing Managers
Index (PMI) data showed, in the latest sign of the damage to the
economy from the coronavirus pandemic.             
    Many Canadian small businesses reeling from losses due to
the coronavirus outbreak may be ineligible for federal
government and bank aid designed to help them survive, industry
experts say, with several already shuttered or rapidly running
out of cash.              
    Canadian government bond yields were higher across a steeper
curve in sympathy with U.S. Treasuries. The 10-year            
rose 5.9 basis points to 0.822%, having touched its highest
intraday level since March 27 at 0.857%.

 (Reporting by Fergal Smith; Editing by Paul Simao and Peter
Cooney)
  
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