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Fergal Smith

CANADA FX DEBT-Canadian dollar extends weekly win streak as speculative buying rises

May 14 2021

(Adds dealer quote and details throughout, updates prices) * Canadian dollar strengthens for seventh straight week * Speculators raise bullish bets to highest since November 2019 * March factory sales rise 3.5%; wholesale trade up 2.8% * Price of U.S. oil settles 2.4% higher By Fergal Smith TORONTO, May 14 The Canadian dollar rose against the greenback on Friday and posted its longest streak of weekly gains since 2016, as speculative bets on the currency climbed and investors shook off the Bank of Canada's concern that further strength could hurt the economy. The loonie was trading 0.4% higher at 1.2109 to the greenback, or 82.58 U.S. cents and was up 0.2% for the week, its seventh straight weekly advance. It has climbed more than 5% since the start of the year, the biggest gain among G10 currencies. Speculators have raised their bullish bets on the Canadian dollar to the highest since November 2019, data from the U.S. Commodity Futures Trading Commission showed. As of May 11, net long positions had increased to 38,629 contracts from 25,947 in the prior week. If the currency continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy, BoC Governor Tiff Macklem said on Thursday. "The market had a little bit of time to think about exactly what the Bank of Canada Governor was saying yesterday and they realized that the fundamentals behind what's driving prices right now hasn't changed," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. Some of the commodities that Canada produces, including copper and oil, have surged this year as the global economy recovers from the coronavirus crisis. U.S. crude oil futures settled 2.4% higher on Friday at $65.37 a barrel, reversing some of the previous day's sharp losses as stock markets strengthened and the U.S. dollar slipped. Domestic data for March showed that factory sales rose 3.5% and wholesale trade was up 2.8%. Canada's 10-year yield was little changed at 1.559%. On Thursday, it touched its highest intraday level in eight weeks at 1.624%. (Reporting by Fergal Smith Editing by Nick Zieminski and David Gregorio)

CANADA FX DEBT-C$ retreats from 6-year high as Macklem flags exports risk

May 13 2021

(Adds strategist quotes and details throughout; updates prices) * Loonie weakens 0.3% against the U.S. dollar * Canadian producer prices rise 14.2% year-over-year in April * Price of U.S. oil settles 3.4% lower * Canadian 10-year yield eases 3.2 basis points to 1.569% By Fergal Smith TORONTO, May 13 The Canadian dollar weakened against its U.S. counterpart on Thursday, pulling back from a six-year high the day before, as oil tumbled and Bank of Canada Governor Tiff Macklem said further appreciation of the currency could weigh on the economy. The Canadian dollar fell 0.3% to 1.2164 to the greenback, or 82.21 U.S. cents, having traded in a range of 1.2104 to 1.2202. On Wednesday, it touched its strongest intraday level since May 2015 at 1.2042 If the buoyant Canadian dollar continues to rise, it could create headwinds for exports and business investment as well as affecting monetary policy, Macklem said. "I think the comments from Macklem were overdue," said Amo Sahota, director at Klarity FX in San Francisco. "There will be boardroom discussions (at exporters) about what do we do if CAD keeps appreciating." The loonie has been on a tear since the Bank of Canada last month shifted to more hawkish guidance and cut the pace of its bond purchases. The recent surge in commodity prices has also bolstered the currency. Canada is a major producer of commodities, including oil. U.S. crude oil futures settled 3.4% lower at $63.82 a barrel as India's coronavirus crisis deepened and a key U.S. pipeline resumed operations, halting a rally that had lifted crude to an eight-week high. Canadian producer prices rose by 14.2% year-over-year in April, the biggest increase since February 1980, led by lumber and other wood products, a flash estimate from Statistics Canada showed. On Friday, Canadian manufacturing sales and wholesale trade data for March are due for release. Canadian government bond yields eased across a flatter curve, tracking the move in U.S. Treasuries. The 10-year was down 3.2 basis points at 1.569%, having pulled back from an earlier eight-week high at 1.624%. (Reporting by Fergal Smith; Editing by Bernadette Baum and Peter Cooney)

CANADA FX DEBT-Canadian dollar holds near 6-year high as U.S. inflation jumps

May 12 2021

(Adds details throughout, updates prices) * Loonie touches its strongest since May 2015 at 1.2046 * Price of U.S. oil settles 1.2% higher * Canadian 10-year yield touches its highest in nearly two weeks By Fergal Smith TORONTO, May 12 The Canadian dollar was little changed against its broadly stronger U.S. counterpart on Wednesday, holding near an earlier six-year high as investors bet that the Bank of Canada would be more sensitive to rising inflation than the Federal Reserve. The U.S. dollar rallied against a basket of major currencies as data showed U.S. consumer prices increasing by the most in nearly 12 years in April. "Higher inflation in the U.S. will spill over into Canada's economy and place upwards pressure on Canadian CPI," said Simon Harvey, senior FX market analyst for Monex Europe and Monex Canada. The Bank of Canada is likely to be "much more sensitive" to rising inflation than the Fed, Harvey said. Last August, the Fed shifted to a new monetary policy strategy, putting new weight on bolstering the U.S. labor market and less on worries about too-high inflation. Canada's central bank signaled last month it could start raising its benchmark interest rate from a record low of 0.25% in late 2022 and cut the pace of its bond purchases. BoC Governor Tiff Macklem is due to speak on Thursday on "the benefits of an inclusive economy." The Canadian dollar was trading nearly unchanged at 1.2100 to the greenback, or 82.64 U.S. cents, having touched its strongest level since May 2015 at 1.2046. It gained ground against the other G10 currencies. One major cause of inflation has been higher prices for some of the commodities that Canada produces, including oil. U.S. crude oil futures settled 1.2% higher at $66.08 a barrel on signs of a speedy economic recovery and upbeat forecasts for energy demand. Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year touched its highest since April 29, up as much as 6.6 basis points on the day. (Reporting by Fergal Smith; Editing by Andrea Ricci and Peter Cooney)

CANADA FX DEBT-Canadian dollar notches 6-year high as U.S. inflation jumps

May 12 2021

* Canadian dollar strengthens 0.3% against the greenback * Loonie touches its strongest since May 2015 at 1.2046 * Price of U.S. oil increases 1.7% * Canadian 10-year yield touches its highest in nearly two weeks By Fergal Smith TORONTO, May 12 The Canadian dollar strengthened against its U.S. counterpart and all the other G10 currencies on Wednesday as oil prices rose and investors bet that the Bank of Canada would be more sensitive to rising inflation than the Federal Reserve. U.S. consumer prices increased by the most in nearly 12 years in April as booming demand amid a reopening economy pushed against supply constraints. "Higher inflation in the U.S. will spillover into Canada's economy and place upwards pressure on Canadian CPI," said Simon Harvey, senior FX market analyst for Monex Europe and Monex Canada. The Bank of Canada is likely to be "much more sensitive" to rising inflation than the Fed, Harvey said. Last August, the Fed shifted to a new monetary policy strategy, putting new weight on bolstering the U.S. labor market and less on worries about too-high inflation. The Bank of Canada last month changed its guidance to show it could start raising its benchmark interest rate from a record low of 0.25% in late 2022. It also tapered its bond purchases, becoming the first major central bank to cut back on pandemic-era money-printing stimulus programs. The Canadian dollar was trading 0.3% higher at 1.2063 to the greenback, or 82.90 U.S. cents, the biggest gain among G10 currencies. It touched its strongest intraday level since May 2015 at 1.2046. One of the major causes of inflation has been higher prices of some of the commodities that Canada produces, including oil. U.S. crude oil futures were up 1.7% at $66.40 a barrel on signs of a speedy economic recovery and upbeat forecasts for energy demand. Canadian government bond yields were higher across the curve, tracking the move in U.S. Treasuries. The 10-year touched its highest since April 29 at 1.587% before dipping to 1.581%, up 4.2 basis points on the day. (Reporting by Fergal Smith; Editing by Andrea Ricci)

UPDATE 2-Canada taps U.S. dollar bond market for first time since pandemic

May 11 2021

TORONTO, May 11 Canada has tapped an international bond market for the first time since before the coronavirus crisis, selling $3.5 billion of a 5-year U.S. dollar global bond in a move that could pad its foreign exchange reserves, a term sheet showed on Tuesday.

CANADA FX DEBT-Canadian dollar rises for 6th straight week despite jobs decline

May 07 2021

(Adds investor quotes and details throughout; updates prices) * Canadian dollar touches a 3-1/2-year high at 1.2125 * For the week, the loonie gains 1.2% * Canada sheds 207,100 jobs in April * Canadian 5-year yield hits a two-month low at 0.841% By Fergal Smith TORONTO, May 7 The Canadian dollar was little changed against the greenback on Friday as jobs data for both Canada and the United States fell short of estimates, with the loonie holding near its strongest level in 3-1/2 years and extending a weekly win streak. Canada lost 207,100 jobs in April as fresh restrictions to contain a variant-driven third wave of COVID-19 weighed on employers, Statistics Canada data showed. Analysts had forecast a decline of 175,000. In the United States, data for the same month showed employers hiring far fewer workers than expected, likely frustrated by labor shortages. "You have this unhealthy environment where growth goals are struggling to be met but unfortunately inflation is picking up everywhere," said Avi Hooper, a senior portfolio manager at Invesco. Supportive of the loonie, one cause of inflation has been a surge in the prices of some of the commodities that Canada produces. Copper surged to a record peak on Friday, fueled by speculators and industrial buyers as Western economies recover from the pandemic, while oil settled 0.3% higher at $64.90 a barrel. "A higher oil price from current levels, we think, will be the catalyst for the next leg of Canadian dollar strength," Hooper said. The loonie was nearly unchanged at 1.2145 to the greenback, or 82.34 U.S. cents, having touched its strongest intraday level since September 2017 at 1.2125. For the week, it was up 1.2%, its sixth straight weekly advance. The currency has been on a tear since the Bank of Canada last month signaled it could begin hiking interest rates in late 2022 and cut the pace of its bond purchases. Canadian government bond yields fell across the curve. The 5-year touched its lowest since March 5 at 0.841% before bouncing to 0.878%, down 3.8 basis points on the day. (Reporting by Fergal Smith; editing by Jonathan Oatis)

CANADA FX DEBT-Canadian dollar rises by most in 11 months as commodities jump

May 06 2021

(Adds dealer quotes and details throughout; updates prices) * Canadian dollar strengthens 1% against the greenback * Touches its strongest since September 2017 at 1.2196 * Loonie posts its biggest gain since June last year * Canadian 10-year yield was little changed at 1.516% By Fergal Smith TORONTO, May 6 The Canadian dollar rose on Thursday to its highest level against its U.S. counterpart in more than three and a half years as the greenback fell broadly and prices of some of the commodities Canada produces surged. Aluminum approached levels not reached since 2018, bolstered by positive economic data and rising tensions between China and Australia, while copper jumped 1.9% and gold was up more than 1.5%. "Commodities matter a fair deal to the Canadian economy," said Michael Goshko, corporate risk manager at Western Union Business Solutions. "When commodity prices strengthen, so too does the Canadian dollar." The loonie was trading 1% higher at 1.2145 to the greenback, or 82.34 U.S. cents, its biggest gain since June last year and its strongest level since September 2017. The currency has been on a tear since the Bank of Canada last month signaled it could begin hiking interest rates in late 2022 and cut the pace of its bond purchases. "You could be witnessing some market capitulation," Goshko said. "In the face of an employment report tomorrow that's supposed to be very negative, it's quite extraordinary to see it (the loonie) doing so well." Analysts expect Canada's employment report on Friday to show the economy shed 175,000 jobs in April as restrictions were tightened in some provinces to contain the coronavirus pandemic. Still, the Canadian dollar is expected to give back some of its recent gains over the coming year as the BoC's more hawkish stance is offset by a potential dialing back of the U.S. Federal Reserve's asset purchase program, a Reuters poll showed. The U.S. dollar on Thursday hit a three-day low against a basket of major currencies. Canada's 10-year yield was little changed at 1.516%, near the middle of its range over the past two months. (Reporting by Fergal Smith; Editing by Mark Heinrich and Dan Grebler)

Canadian dollar seen consolidating gains as drumbeat builds for Fed taper: Reuters poll

May 06 2021

TORONTO The Canadian dollar is expected to give back some of its recent gains over the coming year as the Bank of Canada's more hawkish stance is offset by potential dialing back of the U.S. Federal Reserve's asset purchase program, a Reuters poll showed.

CANADA FX DEBT-Canadian dollar posts 3-year high as risk appetite climbs

May 05 2021

* Canadian dollar strengthens 0.2% against the greenback * Loonie touches its highest level since February 2018 at 1.2252 * Toronto home sales fall nearly 13% in April from March * Canadian 10-year yield was little changed at 1.521% By Fergal Smith TORONTO, May 5 The Canadian dollar strengthened to its highest level in more than three years against its U.S. counterpart on Wednesday, supported by improved investor sentiment and the Bank of Canada's recent shift to more hawkish guidance. The Dow Jones Industrial Average hit a record high as the market recovered from a steep tech sell-off, after investors were encouraged by U.S. Treasury Secretary Janet Yellen's new comments on interest rates and a positive private jobs report. "Risk-on conditions" and the recent move higher in commodity prices bolstered the Canadian dollar," Ronald Simpson, managing director, global currency analysis at Action Economics, said in a note. "In addition, the BoC's tapering of its QE program appears to have shifted USD-CAD's trading range down a notch." Last month, the Bank of Canada cut the pace of its bond purchases and signaled it could hike interest rates in late 2022. Further clues to the central bank's policy outlook could come from Canada's April employment report, due for release on Friday. The Canadian dollar was trading 0.2% higher at 1.2280 to the greenback, or 81.43 U.S. cents, having touched its strongest intraday level since February 2018 at 1.2252. U.S. crude oil futures settled 0.1% lower at $65.63 a barrel as traders used weekly inventory figures as an excuse to pull back from the recent rally. Oil is one of Canada's major exports. Home sales in Toronto, Canada's most populous city, fell nearly 13% in April from March. That bucked the regular spring trend, as demand began to ease after months of blistering growth. Canadian government bond yields were mixed across the curve, with the 10-year little changed at 1.521%. (Reporting by Fergal Smith; Editing by Kirsten Donovan and Nick Zieminski)

CANADA FX DEBT-Canadian dollar slips as seasonal trade shifts in favor of greenback

May 04 2021

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar weakens 0.2% against the greenback * Canada posts a C$1.1 billion trade deficit in March * Price of U.S. oil settles 1.9% higher * Canada's 10-year yield rises 1.3 basis points to 1.535% By Fergal Smith TORONTO, May 4 The Canadian dollar weakened against its U.S. counterpart on Tuesday as the greenback broadly climbed and data showed Canada's trade balance swinging to a surprise deficit in March, with the loonie pulling back from a 3-year high. The Canadian dollar was trading 0.2% lower at 1.2306 to the greenback, or 81.26 U.S. cents, having traded in a range of 1.2274 to 1.2350. Last Friday, the loonie touched its strongest intraday level since February 2018 at 1.2262. It was up 2.2% last month and has now strengthened in eight of the past 10 Aprils. "Given that the (U.S.) dollar has been so badly beaten in April, I think you see some of that pared back and part of that may be related to the seasonal dynamics," said Mazen Issa, senior FX strategist at TD Securities. "May tends to be a much stronger month for the dollar." The greenback rallied against a basket of major currencies after U.S. Treasury Secretary Janet Yellen said interest rates may need to rise to prevent the American economy from overheating. The price of oil , one of Canada's major exports, settled 1.9% higher at $65.69 a barrel after more U.S. states eased lockdowns and the European Union sought to attract travelers. Canada's trade balance shifted back to a deficit of C$1.1 billion in March following two consecutive months of surplus as imports jumped significantly and exports edged up slightly, Statistics Canada said. Analysts had predicted a surplus of C$700 million. Separate data showed that the value of Canadian building permits rose by 5.7% in March from February. Canadian government bond yields were higher across the curve, with the 10-year up 1.3 basis points at 1.535%. (Reporting by Fergal Smith; Editing by Andrea Ricci and Peter Cooney)

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