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CANADA FX DEBT-C$ hits 2-week low against a surging greenback
December 15, 2016 / 2:40 PM / 9 months ago

CANADA FX DEBT-C$ hits 2-week low against a surging greenback

* Canadian dollar at C$1.3373, or 74.78 U.S. cents
    * Loonie touches its weakest since Dec. 1 at C$1.3376
    * Bond prices mixed across the yield curve

    TORONTO, Dec 15 (Reuters) - The Canadian dollar weakened to
a two-week low against its U.S. counterpart on Thursday,
pressured by broader gains for the greenback, lower oil prices
and weaker-than-expected domestic manufacturing data.
    Canadian manufacturing sales unexpectedly fell by 0.8
percent in October from September on widespread weakness,
indicating fourth-quarter growth could be sluggish, Statistics
Canada data showed.
    Analysts polled by Reuters had expected sales to increase by
0.4 percent from September. 
    The U.S. dollar charged to a 14-year high and
government bond yields rose sharply after the Federal Reserve on
Wednesday hiked U.S. interest rates and signaled more would
follow at a faster pace next year. 
    Prices of oil, a major Canadian export, fell. A stronger
U.S. dollar, in which oil is traded, tends to hit crude demand
as it makes fuel purchases more expensive for users of other
currencies.
    U.S. crude prices were down 1.61 percent at $50.22 a
barrel.
    At 9:20 a.m. EST (1420 GMT), the Canadian dollar 
was trading at C$1.3373 to the greenback, or 74.78 U.S. cents,
weaker than Wednesday's close of C$1.3274, or 75.34 U.S.
    The currency's strongest level of the session was C$1.3269,
while it touched its weakest since Dec. 1 at C$1.3376.
    Sales of Canadian homes fell 5.3 percent in November from
October, a report from the Canadian Real Estate Association
showed. 
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year price flat to yield
0.808 percent and the benchmark 10-year falling 15
Canadian cents to yield 1.812 percent.
    The 2-year yield fell 3.1 basis points below its U.S.
equivalent to a spread of -46.3 basis points.
    Strategists expect the spread to widen to as much as 80
basis points by the end of 2017 as the Bank of Canada shows no
desire to follow Fed increases. 
    The Bank of Canada will release its financial system review
at 10:30 a.m. EST (1530 GMT) assessing the key risks to the
country's financial system. Investors will look to see if the
risks from high household debt and high home prices have
increased. 

 (Reporting by Fergal Smith; Editing by Nick Zieminski)

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