February 12, 2018 / 9:56 PM / 2 years ago

CANADA FX DEBT-C$ dips as investors weigh bullish bets data

 (Adds strategist quotes and details on U.S. dollar and updates
    * Canadian dollar at C$1.2601, or 79.36 U.S. cents
    * Bond prices rise across the yield curve
    * Canada-U.S. 10-year spread reaches widest since Dec. 19

    By Fergal Smith
    TORONTO, Feb 12 (Reuters) - The Canadian dollar slipped on
Monday against its U.S. counterpart, lagging the performance of
many other major currencies as investors weighed data showing an
increase in bullish bets on the currency.    
    At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was
trading 0.2 percent lower at C$1.2601 to the greenback, or 79.36
U.S. cents.
    The currency traded in a range of C$1.2556 to C$1.2623. On
Friday, it touched a six-week low at C$1.2690 after domestic
data showed the biggest decline in jobs since January 2009.
    Also on Friday, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed that speculators
raised bullish bets on the Canadian dollar for the fifth
straight week. As of Feb. 6, net long positions had risen to
40,164 contracts from 33,465 a week earlier.             
    "One would have thought that with a market that was long
CAD, that maybe that (positioning) would have been trimmed,"
said Greg Anderson, global head of foreign exchange strategy at 
BMO Capital Markets in New York. "Maybe coming into trading
today that had the market spooked and it decided to sell CAD
against everything."
    Investors that have made bullish bets on a currency could be
vulnerable to losses if other investors that are long choose to
cut or exit their positions.
    The U.S. dollar        fell against a basket of major
currencies, including the euro, as U.S. stocks recouped some
losses from the dramatic sell-off that saw the S&P 500's
sharpest decline in more than two years.                 
    Commodity-linked currencies, such as the Canadian dollar
tend to underperform when stocks fall. The loonie retreated 1.2
percent last week.
    The price of oil, one of Canada's major exports, recovered
some of last week's steep losses. U.S. crude        prices
settled 0.2 percent higher at $59.29 a barrel.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 1 Canadian cent to yield
1.783 percent and the benchmark 10-year             rising 11
Canadian cents to yield 2.338 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 3.7 basis points to a spread of -51.6
basis points, its widest since Dec. 19.
    The Canadian Real Estate Association will release its
monthly home sales report on Thursday. Canada's manufacturing
sales report for December is due on Friday.

 (Reporting by Fergal Smith; Editing by Sandra Maler)
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