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7 months ago
CANADA FX DEBT-C$ hits near 3-week high; global data, Fed risk help
January 4, 2017 / 10:08 PM / 7 months ago

CANADA FX DEBT-C$ hits near 3-week high; global data, Fed risk help

(Adds strategist comment, updates prices to close)
    * Canadian dollar ends at $1.3308, or 75.14 U.S. cents
    * Bond prices higher across the yield curve
    * Loonie touches its strongest since Dec. 15 at C$1.3282

    By Alastair Sharp
    TORONTO, Jan 4 (Reuters) - The Canadian dollar hit a near
three-week high against a weaker U.S. counterpart on Wednesday,
helped by upbeat global economic data as investors tempered
greenback bets around the release of minutes from the U.S.
Federal Reserve's December meeting.
    The loonie, as Canada's currency is known, rose together
with gains for other commodity-linked currencies after a batch
of European data showed that French consumer confidence hit a
nine-year high, business activity across the euro zone rose at
the fastest pace in more than five years and inflation in the
euro zone is its highest in over three years. 
    This followed similarly upbeat reports this week on U.S.,
British, Chinese and Japanese business activity. 
    The loonie likely also benefited as investors pared bets on
further appreciation in the greenback - which hit a 14-year peak
in the prior session - going into the Fed minutes and saw little
reason to retrace that move afterward. 
    U.S. short-term interest rate futures rose slightly after
the release of the minutes but not enough to suggest altered
expectations for the central bank's rate hike path this year.
    "You could have, and I think this is a strong probability
outcome, multiple investors that were looking at the FOMC
minutes (due out) at 2 p.m. today and saying to themselves the
potential event risk is significant enough that I need to
rebalance ahead of that," said Brad Schruder, director of
foreign exchange sales at BMO Capital Markets.
    The Canadian dollar ended the day trading at
C$1.3308 to the greenback, or 75.14 U.S. cents, much stronger
than Tuesday's close of C$1.3433, or 74.44 U.S. cents.
    The currency's weakest level of the session was C$1.3456,
while it touched its strongest since Dec. 15 at C$1.3282.
    The Australian dollar rose 0.8 percent, while the New
Zealand dollar was up 0.8 percent. Canada's gain was
almost 1 percent.
    Commodity-linked currencies, such as the Canadian dollar,
the Australian and New Zealand dollars, tend to benefit more
than many others from an upswing in growth.
    Canadian government bond prices were higher across the yield
curve, with the two-year up 2 Canadian cents to yield
0.755 percent and the 10-year rising 26 Canadian
cents to yield 1.711 percent.
    Canada's trade report for November and employment report for
December are due on Friday. 

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and Lisa Shumaker)

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