May 7, 2020 / 8:24 PM / 3 months ago

CANADA FX DEBT-C$ posts biggest gain in six weeks as Chinese data spurs optimism

 (Adds details throughout; updates prices)
    * Canadian dollar rises 1% against the greenback
    * The gain for the loonie is biggest since March 26
    * Price of U.S. oil decreases 1.8%
    * Canadian bond yields fall across a flatter curve

    TORONTO, May 7 (Reuters) - The Canadian dollar notched its
biggest rally in six weeks against the greenback on Thursday as
data showing an unexpected increase in Chinese exports raised
hopes for the global economy, with the loonie rebounding from an
earlier two-week low.
    World shares          rose as the Chinese data stoked
speculation China could recover from its coronavirus lockdown
quicker than first thought and support global growth in the
process.             
    The Canadian dollar "has been mostly tracking risky assets
today, equities in particular," said Alvise Marino, FX
strategist at Credit Suisse in New York.
    Canada runs a current account deficit and is a major
exporter 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 1.8% lower at $23.55 a
barrel as global supply and demand worries erased earlier gains,
while the U.S. dollar lost ground against a basket of major
currencies as another report showed millions more Americans were
unemployed.                         
    The Canadian dollar          was trading 1% higher at 1.4000
to the greenback, or 71.43 U.S. cents, its biggest advance since
March 26.
    The loonie earlier touched its weakest intraday level since
April 23 at 1.4173. Since the start of the year the currency has
fallen more than 7%.
    The Canadian dollar will regain some lost ground over the
coming year, along with a potential recovery in the price of oil
and in the global economy, after it was crippled by the COVID-19
pandemic, a Reuters poll showed.             
    In domestic data, the Ivey Purchasing Managers Index (PMI)
index fell to a record low of 22.8 in April, a month when
non-essential business activity was halted across the country
due to the coronavirus crisis.             
    Canada's jobs report for April is due on Friday and is
expected to show Canadian employment plunged by 4 million in
April on top of the 1 million jobs the economy shed in March.
    Canadian bond yields eased across a flatter curve in
sympathy with U.S. Treasuries on Thursday. The 10-year yield
            fell 6.4 basis points to 0.550%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)
  
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