April 13, 2009 / 8:35 PM / in 9 years

CANADA FX DEBT-C$ up as greenback weakens ahead of earnings

* C$ ends at 82.01 U.S. cents

* Touches highest level since Feb. 10

* Bonds largely flat ahead of earnings reports

By Jennifer Kwan

TORONTO, April 13 (Reuters) - The Canadian dollar shot up to its highest level in nearly nine weeks against the U.S. currency on Monday as worries over upcoming U.S. earnings results helped to dent the greenback’s appeal.

“We have seen very substantial moves lower for the U.S. dollar against some of the major currencies,” said George Davis, chief technical strategist at RBC Capital Markets.

“That has been the primary catalyst behind the move higher in the Canadian dollar.”

Davis said the greenback was weighed down in part by investor caution as markets braced for key earnings reports this week from financial companies such as Goldman Sachs GS.N, JPMorgan JPM.N and Citigroup C.N.

“I think some of that uncertainty might be weighing on the U.S. dollar a little bit,” said Davis.

The Canadian dollar also got a lift from two surveys from the Bank of Canada, which suggested some easing of the economic gloom, Davis said.

The surveys showed credit continued to tighten in the first quarter of this year and businesses see their sales, investment and hiring activity weakening over the next year. [ID:nN13340889]

While still a negative reading, the reports offered a glimmer of improvement in sentiment, said Davis.

“I think the data that came out today would have been a small positive,” he said. “The good news, if anything, is that the results this time were not as negative as the prior survey.”

The Canadian dollar finished at C$1.2193 to the U.S. dollar, or 82.01 U.S. cents, rising from C$1.2252 to the U.S. dollar, or 81.62 U.S. cents, at Thursday’s Bank of Canada close.

The currency touched a high of C$1.2165 to the U.S. dollar, or 82.20 U.S. cents, during the session, its highest level since Feb. 10 when it was at 82.30 U.S. cents

Markets in Canada were closed on Friday for the Easter holidays. Trade was thin on Monday with many Asian and European centers still shut. [ID:nSP447323]

BOND PRICES FLAT

Canadian bond prices were largely flat with prices slightly higher at the short end and inching lower at the long end, as investors awaited earnings reports from major U.S. financial institutions this week.

“The price changes are very minute,” said Sheldon Dong, fixed income analyst TD Waterhouse Private Investment. “It’s a very light volume, featureless session.”

The two-year bond was up 4 Canadian cents at C$100.31 to yield 1.102 percent, while the 10-year bond fell 12 Canadian cents to C$107.08 to yield 2.935 percent.

The 30-year bond pulled back by 10 Canadian cents to C$123.85 to yield 3.638 percent. In the United States, the 30-year treasury yielded 3.6846 percent.

Canadian bonds mostly underperformed their U.S. counterparts, with the 30-year bond 4.70 basis points below its U.S. counterpart, compared with about 10 basis points on Thursday. (Reporting by Jennifer Kwan; editing by Rob Wilson)

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