April 12, 2017 / 1:45 PM / 3 months ago

CANADA FX DEBT-C$ posts 9-day high ahead of Bank of Canada rate decision

3 Min Read

    * Canadian dollar at C$1.3314, or 75.11 U.S. cents
    * Bond prices mixed across the yield curve

    TORONTO, April 12 (Reuters) - The Canadian dollar
strengthened on Wednesday to a nine-day high against its U.S.
counterpart ahead of a Bank of Canada interest rate decision,
supported by higher prices of oil, one of the country's major
exports.
    U.S. crude        prices rose 0.26 percent to $53.54 a
barrel after Saudi Arabia was said to be pushing its fellow OPEC
members and some rivals to prolong supply cuts beyond June.
            
    The Bank of Canada is widely expected to hold rates at 0.50
percent when it releases its interest rate decision and Monetary
Policy Report at 10 a.m. ET (1400 GMT).
    The strength of recent domestic data has pointed to a pickup
in Canada's economy. But the central bank has been skeptical
about the sustainability of the improvement and has worried
about "significant uncertainties" that weigh on the outlook.
    "We expect that concern about possible protectionist trade
measures from the U.S. will continue to be highlighted as a key
near-term risk to growth," said RBC Capital Markets in a
research note this morning.
    At 9:12 a.m. ET (1312 GMT), the Canadian dollar          was
trading at C$1.3314 to the greenback, or 75.11 U.S. cents,
stronger than Tuesday's close of C$1.3332, or 75.01 U.S. cents.
    The currency's weakest level of the session was C$1.3339,
while it touched its strongest since April 3 at C$1.3307.
    Gains for Canada's risk-sensitive currency came as a break
in alarming international political news cooled a safe-haven
rally that saw the yen and gold at five-month highs and
top-rated government bond yields at their lowest this year.
            
    Canadian home prices rose in March, extending their climb in
major cities in Ontario and British Columbia, according to data
which was likely to add to concerns about housing affordability
in some parts of the country.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            down 1 Canadian cent to
yield 0.736 percent and the 10-year             rising 4
Canadian cents to yield 1.540 percent.
    The western Canadian province of Manitoba on Tuesday
forecast an C$840 million deficit for its 2017-18 budget, its
ninth straight shortfall, as Premier Brian Pallister's
Progressive Conservatives chart a long path back to balanced
budgets.             

 (Reporting by Fergal Smith Editing by W Simon)
  
 

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