July 4, 2019 / 7:50 PM / 18 days ago

CANADA FX DEBT-C$ steadies near 8-month high ahead of domestic jobs data

 (Adds dealer quotes and details throughout; updates prices)
    * Loonie touches an eight-month high at 1.3038 per U.S.
dollar
    * Price of U.S. oil falls 0.9%
    * Canadian government bond prices dip across a flatter yield
curve

    By Fergal Smith
    TORONTO, July 4 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday, holding near
an earlier eight-month high which was notched after a number of
recent data releases pointed to a pick up in the domestic
economy.
    At 3:25 p.m. (1925 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3055 to the greenback, or 76.60
U.S. cents. The currency touched its strongest level since Oct.
25, last year at 1.3038, while its weakest was 1.3079.
    The narrow range for the currency came as markets were
closed in the United States for the Independence Day holiday.
    "There is certainly decent momentum for the Canadian dollar
given the string of strong and somewhat surprising data," said
Michael Goshko, a corporate risk manager at Western Union
Business Solutions.
    Data last Friday showed faster-than-expected growth in
Canada's economy in April, while a report on Wednesday showed a
surprise swing in the May trade balance to surplus. Canada's
jobs report for June is due on Friday.                          
   
    "Until the data begins to really soften in Canada, the BoC
is going to be standing pat as far as the eye can see ... that's
certainly at odds with what is going on in the United States."
    Money markets see about a 20% chance of an interest rate cut
this year from the Bank of Canada, down from about 50% two weeks
ago. The central bank will next week make an interest rate
decision and revise its growth forecasts for the economy.
          
    The Federal Reserve has signaled that it could ease rates as
early as this month due to growing risks to the U.S. economy,
especially related to the trade war between Washington and
Beijing, and low inflation.    
    The loonie notched an eight-month high even as the price of
oil, one of Canada's major exports, was weighed down by data
showing a smaller-than-expected draw on U.S. crude stockpiles
along with worries about the global economy. U.S. crude oil
futures        were down 0.9% at $56.80 a barrel.             
    Canadian government bond prices were lower across a flatter
yield curve, with the two-year            down 4 Canadian cents
to yield 1.520% and the 10-year             falling 10 Canadian
cents to yield 1.466%.
    The 10-year yield fell 1.2 basis points further below the
2-year yield to a negative spread of 5.4 basis points. On
Friday, that part of the curve inverted for the first time since
August 2007.

 (Reporting by Fergal Smith; 
Editing by Sandra Maler)
  
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