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CANADA FX DEBT-C$ notches 6-week high as Bank of Canada turns less dovish
April 12, 2017 / 9:22 PM / 5 months ago

CANADA FX DEBT-C$ notches 6-week high as Bank of Canada turns less dovish

    * Canadian dollar ends at C$1.3273, or 75.34 U.S. cents
    * Loonie touches its strongest since Feb. 28 at C$1.3238
    * Bond prices higher across a flatter yield curve

 (Adds portfolio manager quotes and details on Trump's comments
and updates prices)
    By Fergal Smith
    TORONTO, April 12 (Reuters) - The Canadian dollar
strengthened on Wednesday to a six-week high against its U.S.
counterpart after the Bank of Canada turned less dovish, while
comments by U.S. President Donald Trump weighed on the
greenback.
    The Bank of Canada did not even consider cutting interest
rates as it left monetary policy unchanged on Wednesday amid
signs of strong growth, but it is too early to conclude the
economic growth is sustainable, Governor Stephen Poloz said.
            
    "They are still sitting on the fence but feeling that the
numbers are coming in a little bit better," said Hosen Marjaee,
senior managing director, Canadian fixed income at Manulife
Asset Management.
    "We think that a rate hike may be a little bit earlier than
we thought before."
    The Bank of Canada will likely maintain its wait-and-see
stance on monetary policy until early next year, a Reuters poll
found last week.             
    The U.S. dollar        fell against a basket of currencies
after Trump said that the greenback was "getting too strong" and
would eventually hurt the U.S. economy.             
    The Canadian dollar          ended at C$1.3273 to the
greenback, or 75.34 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 Feb. 28 at C$1.3238.
    Gains for the loonie came even as prices of oil, one of
Canada's major exports, fell after U.S. crude inventory data
suggested the market was still heavily supplied.      
    U.S. crude oil futures        settled 29 cents lower at
$53.11 a barrel.
    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 higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           edged up 1 Canadian cent to yield 0.725 percent and
the 10-year             climbed 30 Canadian cents to yield 1.509
percent.
    The difference in yield between Canada's 10-year bond and
its U.S. equivalent narrowed by 3.6 basis points to a spread of
-73.4 basis points as U.S. Treasuries outperformed.

 (Additional reporting by Dan Burns; Editing by Andrea Ricci and
Chizu Nomiyama)
  
 

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