* C$ at C$1.0012 versus US$, or 99.88 U.S. cents
* Minor oil price gains help C$, slightly
* Gains vs euro as Germany, France shrank in Q4
* Nexen deal approval seen prompting some C$ buying
By Alastair Sharp
TORONTO, Feb 14 The Canadian dollar eked out a
slight gain against the U.S. currency on Thursday, helped by
moderate improvement in the price of oil, and hit a three-week
high against the euro after a string of weak gross domestic
product data hurt the single currency.
Oil prices edged up on fears about U.S. gasoline supply,
helping the commodity-linked Canadian currency notch a minor
gain against the greenback.
"That's the only real historically strong driver that's been
going in the same direction as the Canadian dollar recently,"
said Greg Moore, foreign exchange strategist at TD Securities.
Some strategists have pointed out that in recent weeks the
U.S/Canadian dollar trade has been driven mostly by changes in
the spread between the two-year government bond yields of the
major trading partners.
The Canadian dollar ended the session at C$1.0012
to the greenback, or 99.88 U.S. cents, compared with C$1.0018,
or 99.82 cents, at Wednesday's North American close.
The price of the two-year bond was up 4 Canadian
cents to yield 1.130 percent, while the benchmark 10-year bond
rose 29 Canadian cents to yield 2.006 percent.
Canadian debt outperformed its U.S. equivalent at the short
end of the curve but underperformed it at the long end.
Against the euro, meanwhile, Canada's currency at
one point gained more than 1 percent to its strongest level
since Jan. 24, and was last trading around C$1.3371 to the euro.
"It's being overlooked in light of broader global macro and
data related issues pertaining to Japan and Eurozone GDP numbers
that missed expectations," said Jack Spitz, managing director of
foreign exchange at National Bank Financial.
Both the German and French economies, the euro zone's
largest, shrank in the last three months of 2012, pushing the
region deeper into recession.
Japan, which has been eyeing a weaker currency to boost
exports, meanwhile posted a third straight quarterly GDP
National's Spitz said the Canadian dollar would likely trade
between C$1.01 and C$0.999 to the U.S. dollar in the short-term.
He saw the recent approval of CNOOC's bid for Nexen
prompting some Canadian dollar buying as Canadian shareholders
convert their U.S. dollar-denominated windfall into their
domestic currency. But he added that in the longer term the
currency will likely weaken given tepid economic growth
TD's Moore said that domestic manufacturing data due out on
Friday could reignite selling pressure on the loonie, as
Canada's currency is colloquially known, if already dismal
expectations prove too optimistic.
Moore said the loonie could move dramatically once the U.S.
government decides the fate of the Keystone XL pipeline, which
could help reduce bottlenecks by sending Western Canadian oil to
refineries south of the border.