April 12, 2019 / 8:09 PM / 6 months ago

CANADA FX DEBT-C$ rallies as U.S. stocks approach record highs

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.4% against the greenback
    * Price of U.S. oil increases 0.5%
    * Loonie ends up 0.5% for the week
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, April 12 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday, adding to
this week's gains as oil prices rose and U.S. stocks climbed
back to near record highs.
    The S&P 500 moved within a percent of September's record
closing high after the largest U.S. bank soothed worries that
the first-quarter earnings season would pour cold water on Wall
Street's big rally back from last year's slump.             
    Canada is a major exporter of commodities, including oil, so
its currency tends to benefit from the positive signal higher
stock prices send about the outlook for the global economy. 
    "On the back of (U.S.) dollar weakness and a better risk
tone, the loonie is getting a little bit of a bid," said Erik
Nelson, a currency strategist at Wells Fargo.    
    The U.S. dollar        declined against a basket of major
currencies, while oil prices rose as involuntary supply cuts
from Venezuela, Libya and Iran supported perceptions of a
tightening market. U.S. crude oil futures        settled 0.5%
higher at $63.89 a barrel.      
    At 3:58 p.m. (1958 GMT), the Canadian dollar          was
trading 0.4% higher at 1.3329 to the greenback, or 75.02 U.S.
cents. The currency, which was up 0.5% for the week, traded in a
range of 1.3313 to 1.3386.
    The loonie made ground despite data showing Canadian home
prices fell in March for the sixth straight month.             
    Data from the U.S. Commodity Futures Trading Commission and
Reuters calculations showed that speculators have cut their
bearish bets on the Canadian dollar. As of April 9, net short
positions had dipped to 43,202 contracts from 44,323 in the
prior week.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries.
    The two-year            fell 8.5 Canadian cents to yield
1.633% and the 10-year             was down 54 Canadian cents to
yield 1.784%, its highest yield since March 12.

 (Reporting by Fergal Smith; editing by Grant McCool)
  
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