June 1, 2007 / 12:28 PM / 11 years ago

Canadian dollar rides momentum higher, bonds dip

 TORONTO, June 1 (Reuters) - The Canadian dollar was higher
versus the U.S. currency on Friday and sitting just shy of the
three-decade high it reached earlier this week as appetite from
overseas investors remained strong.
 Domestic bond prices were a touch lower ahead of a slew of
U.S. economic data that is expected to set the tone due to the
absence of any Canadian economic reports.
 At 8:15 a.m. (1215 GMT), the Canadian unit was at C$1.0670
to the U.S. dollar, or 93.72 U.S. cents, up from C$1.0696 to
the U.S. dollar, or 93.49 U.S. cents, at Thursday's close.
 The rise in the Canadian dollar all week has been pegged to
a combination of strong domestic data, and growing expectations
for summer rate hikes by the Bank of Canada.
 The currency charged as high as C$1.0666 to the U.S.
dollar, or 93.76 U.S. cents, this week, its highest level since
July 1977 and triggering talk of parity with the U.S. dollar.
 "Fundamentals favor the Canadian dollar strengthening,"
said David Bradley, director of foreign exchange trading at
Scotia Capital. "There's definitely an argument to be buying
Canadian dollars."
 CIBC World Markets said on Friday the Canadian dollar will
reach parity with the U.S. dollar by the end of 2007 given the
expectations for higher domestic interest rates and solid
economic growth.
 Other factors supporting the rise in the Canadian dollar
have been foreign interest in Canadian companies, a rise in
commodity prices and a generally weaker U.S. dollar.
 The Bank of Canada left interest rates unchanged at 4.25
percent this week but warned it might raise rates in the near
 Friday's North American session will be dictated largely by
the U.S. data, most notably reports on employment and
manufacturing that could offer hints on the U.S. rate outlook,
 Strong data could send the greenback higher, but Bradley
said momentum will help the Canadian currency find support
around C$1.0710 to the U.S. dollar before bouncing back.
 Canadian bond prices, with no domestic data to consider,
eased slightly ahead of the U.S. reports.
 Prices have been in decline over the past three months as
improving economic data prompted economists to shift their
views on the Canadian interest rate outlook.
 The two-year bond was down 1 Canadian cent at C$98.42 to
yield 4.591 percent, while the 10-year bond slid 4 Canadian
cents to C$96.38 to yield 4.494 percent.
 The yield spread between the two-year and 10-year bond was
-9.7 basis points, compared with -8.6 basis points at the
previous close.
 The 30-year bond dipped 3 Canadian cents to C$120.95 to
yield 4.390 percent. In the United States, the 30-year treasury
yielded 5.019 percent.
 The three-month when-issued T-bill yielded 4.32 percent,
unchanged from the previous close.

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below