June 22, 2020 / 8:16 PM / 18 days ago

CANADA FX DEBT-Canadian dollar strengthens along with gains on Wall Street

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.5% against the greenback
    * Loonie trades in a range of 1.3518 to 1.3630
    * Price of U.S. oil increases 1.8%
    * Canadian bond yields edge higher across the curve

    By Fergal Smith
    TORONTO, June 22 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday as investors
focused on the rally on Wall Street rather than the prospect of
a long period of monetary policy stimulus from the Bank of
Canada.
    Wall Street's major indexes climbed as investors appeared to
look past the potential economic impact of rising coronavirus
cases in the United States and other major economies.
            
    Commodity-linked currencies such as the Canadian dollar have
benefited since March from a rally in stocks because of the
message it sends about prospects for economic recovery.
    "Insofar as risk assets remain better supported, these
currencies and particularly CAD are going to reflect that," said
Mazen Issa, a senior FX strategist at TD Securities.
    New Bank of Canada Governor Tiff Macklem said the central
bank's bond-buying program had shifted from being supportive of
market functioning to providing stimulus to the economy as it
recovers.             
    "Our base case still is that they will continue to run QE
(quantitative easing) at least through the spring of next year,"
Issa said.
    Investors, looking past the COVID-19 pandemic, are betting
that the Bank of Canada could be among the first major central
banks to hike interest rates in 2022, signaling Macklem's
success so far in convincing the market not to expect negative
rates.             
    The Canadian dollar        was trading 0.5% higher at 1.3532
to the greenback, or 73.90 U.S. cents. The currency, which
dipped 0.1% last week, traded in a range of 1.3518 to 1.3630.
    The price of oil, one of Canada's major exports, rose on
tighter supplies from major producers and as coronavirus
lockdowns continued to ease. U.S. crude oil futures       
settled 1.8% higher at $40.46 a barrel.    
    Canadian government bond yields edged higher across the
curve, with the 10-year             up less than one basis point
at 0.540%.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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