December 9, 2016 / 10:06 PM / a year ago

CANADA FX DEBT-C$ outpaces greenback, posts new 7-week high as oil rises

(Adds analyst quotes and details on background, updates prices)
    * Canadian dollar ends at C$1.3180, or 75.87 U.S. cents
    * Loonie touches its strongest since Oct. 20 at C$1.3153
    * Bond prices lower across a steeper yield curve
    * 10-year yield touches its highest since November 2015

    By Fergal Smith
    TORONTO, Dec 9 (Reuters) - The Canadian dollar strengthened
to a fresh seven-week high against its U.S. counterpart on
Friday, with the risk-sensitive, commodity-linked currency
outpacing broader gains for the greenback as oil and stocks
climbed.
    For the week, the loonie rose 0.8 percent, its second
straight advance.
    "Oil and stops has CAD higher," said Greg Anderson, global
head of foreign exchange strategy at BMO Capital Markets.
    Stop-loss orders, which are used by investors to limit
losses on a trade, were triggered below C$1.3200 to the
greenback, Anderson said.
    Major U.S. stock indexes powered to another day of fresh
record highs, while the U.S. dollar gained ground
against a basket of major currencies.
    The U.S. Federal Reserve is widely expected to raise
interest rates for the first time this year when it meets next
week.
    "I do think (the Canadian dollar rally) will reverse after
the Fed raises rates, but tough to jump in front of right now."
said Anderson.
    Yields on Canada's bonds will fall further below those of
their U.S. counterparts, say strategists, softening the blow of
expected Fed rate hikes on already stretched Canadian
households.        
    Higher prices for oil, one of Canada's major exports, have
helped support the Canadian dollar after last week's output cut
agreement by members of the Organization of the Petroleum
Exporting Countries.
    U.S. crude oil futures settled up 66 cents at $51.50
a barrel on hopes that non-OPEC producers meeting in Vienna
would also agree to cut output. 
    The Canadian dollar ended at C$1.3180, or 75.87
U.S. cents, stronger than Thursday's close of C$1.3191, or 75.81
U.S. cents.
    The currency's weakest level of the session was C$1.3213,
while it touched its strongest since Oct. 20 at C$1.3153.
    Some market players believe that the Bank of Canada would
prefer a weaker currency to support the country's exporters.   
    On Wednesday, the central bank pointed to "significant"
slack in the Canadian economy as it held interest rates steady.
 
    But it omitted "discussion of competitiveness pressures,"
which gave the market "a little bit of permission" to drive the
currency higher, Anderson said.   
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries.
    The two-year fell 4 Canadian cents to yield 0.741
percent and the benchmark 10-year declined 63
Canadian cents to yield 1.731 percent.
    It touched its highest intraday since Nov. 9, 2015 at 1.758
percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and
Jonathan Oatis)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below