October 25, 2018 / 9:06 PM / 3 months ago

CANADA FX DEBT-C$ dips as boost fades from BoC rate hike

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    * Canadian dollar falls 0.1 percent against greenback
    * Price of U.S. oil rises 0.8 percent
    * Canadian bond prices decline across the yield curve

    By Fergal Smith
    TORONTO, Oct 25 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Thursday, largely unwinding the
boost it got from a Bank of Canada interest rate hike a day
earlier.
    At 4:42 p.m. (2042 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3071 to the greenback, or 76.51
U.S. cents. The currency traded in a range of 1.3015 to 1.3098. 
    On Wednesday, the loonie touched its strongest intraday
level in a week, at 1.2969, after the Bank of Canada raised
interest rates and said it might speed up the pace of future
hikes given that the economy was running at almost full capacity
and did not need any stimulus.             
    Money markets expect the central bank to hike rates again by
January.           
    "I think a little bit of the wind that was pushing it higher
with the Bank of Canada raising rates yesterday has dissipated,"
said Rahim Madhavji, president of Knightsbridge Foreign
Exchange. "I think the move yesterday was perhaps too
aggressive."
    The price of oil, one of Canada's major exports, tracked the
U.S. stock market higher a day after Wall Street's biggest drop
since 2011 and as Saudi Arabia's energy minister signaled major
producers may have to intervene in crude markets to support
prices.             
    U.S. crude oil futures        settled 0.8 percent higher at
$67.33 a barrel.
    U.S. stocks jumped as Microsoft's upbeat earnings spurred a
rebound in technology names and investors snapped up oversold
shares.             
    Canadian average weekly earnings of nonfarm payroll
employees rose 2.9 percent year-over-year in August, while the
number of nonfarm payroll employees was up 24,600 in August from
July, according to data released on Thursday here.
  
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 1.5 Canadian cents to
yield 2.315 percent, and the 10-year             falling 8
Canadian cents to yield 2.452 percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent narrowed by 1.3 basis points to a spread of 53.6
basis points in favor of the U.S. bond.  

 (Reporting by Fergal Smith; editing by Jonathan Oatis and
Leslie Adler)
  
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