February 13, 2018 / 9:57 PM / 2 months ago

CANADA FX DEBT-C$ dips as investors assess commodity-linked currency bets

 (Adds strategist comments and details throughout; updates
prices)
    * Canadian dollar at C$1.2595, or 79.40 U.S. cents
    * U.S. crude oil dips 0.2 percent
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Feb 13 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Tuesday as investors assessed
bets on commodity-linked currencies and weighed gloomy remarks
by Canada's chief negotiator at talks to modernize NAFTA.       
 
    At 4 p.m. EST (2100 GMT), the Canadian dollar CAD=D4 was
trading 0.1 percent lower at C$1.2595 to the greenback, or 79.40
U.S. cents. The currency traded in a range of $1.2567 to
C$1.2625.
    The loonie, which has fallen 2.6 percent since the sell-off
on Wall Street began earlier this month, lagged the performance
of some other major currencies, including the euro and the yen.
Fellow commodity-linked currency, the Australian dollar, also
underperformed.
    "A lot of it has to do with position squaring and how
sensitive these (commodity-linked) currencies are to global risk
markets." said Bipan Rai, Executive Director and Senior Macro
Strategist at CIBC Capital Markets.
    On Friday, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed that speculators
raised bullish bets on the Canadian dollar for the fifth
straight week.             
    Investors that have made bullish bets on a currency could be
vulnerable to losses if other investors that are long choose to
cut or exit their positions.
    Talks to revamp the $1.2 trillion North American Free Trade
Agreement had achieved little progress on major issues so far,
Canada's chief negotiator Steve Verheul said.             
    Canada sends about 75 percent of its exports to the United
States.    
    The price of oil, one of Canada's major exports, dipped
after the International Energy Agency forecast supply could
outstrip demand. U.S. crude oil futures        settled 0.2
percent lower at $59.19 a barrel.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 0.5 Canadian cent to
yield 1.781 percent and the 10-year             rising 14
Canadian cents to yield 2.32 percent.
    The Canadian Real Estate Association will release its
monthly home sales report on Thursday. Canada's manufacturing
sales report for December is due on Friday.

 (Reporting by Fergal Smith; editing by Grant McCool)
  
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