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Fergal Smith

CANADA FX DEBT-Canadian dollar adds to weekly advance as greenback slides

28 Nov 2020

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar rises 0.2% against the greenback * Loonie hits its strongest since Nov. 9 at 1.2972 * For the week, the loonie gains 0.9% * Canadian bond yields ease across much of the curve By Fergal Smith TORONTO, Nov 27 The Canadian dollar strengthened to a near three-week high against its U.S. counterpart on Friday, as the greenback broadly declined in thinner than usual trading conditions following the previous day's U.S. Thanksgiving holiday. The loonie was trading 0.2% higher at 1.2983 to the greenback, or 77.02 U.S. cents, having touched its strongest intraday level since Nov. 9 at 1.2972. For the week, the currency was up 0.9%. "The move in the CAD is in sync with what we're observing in most other developed market currencies. That's a reflection of the weaker USD," said Bipan Rai, North America head, FX strategy at CIBC Capital Markets. "Thinner than usual liquidity" during the North American trading session contributed to the move, Rai said. The U.S. dollar hit its lowest level in almost three months, after strong economic data from China favored commodity currencies over safe havens and equity markets continued their rally. Canada is a major exporter of commodities, including oil. U.S. crude oil futures settled 18 cents lower at $45.53 a barrel but still notched its fourth straight week of gains ahead of an OPEC+ meeting early next week. Canada next week will reveal the breadth of the emergency spending it has made during the pandemic and lay the groundwork for future stimulus and social measures, like a national childcare program, government sources told Reuters. The country's economy could rebound faster than expected if consumer spending jumps in the wake of a successful coronavirus vaccination effort, Bank of Canada Governor Tiff Macklem said on Thursday. Canadian government bond yields eased across much of the curve on Friday, with the 10-year yield down 1.4 basis points at 0.677%. (Reporting by Fergal Smith; editing by Emelia Sithole-Matarise and Chizu Nomiyama)

CANADA FX DEBT-Canadian dollar dips as oil gives back some recent gains

27 Nov 2020

(Adds strategist quote and details throughout; updates prices) * Canadian dollar falls 0.1% against greenback * Canadian payroll employment rises by 337,500 in September * Price of U.S. oil decreases 1.6% * Canadian bond yields ease across much of a flatter curve By Fergal Smith TORONTO, Nov 26 The Canadian dollar edged lower against the greenback on Thursday as the rally in oil lost some momentum, but the currency held near a two-week high it notched the day before. The price of oil, one of Canada's major exports, slipped from seven-month highs as signs of growing supplies helped to halt a rally driven by optimism that COVID-19 vaccines will revive fuel demand. U.S. crude prices were down 1.6% at $44.99 a barrel, while the Canadian dollar was trading 0.1% lower at 1.3016 to the greenback, or 76.83 U.S. cents. It traded in a narrow range of 1.2990 to 1.3022. On Wednesday, the loonie touched its strongest intraday level since Nov. 10 at 1.2982 as recent progress on vaccines, Joe Biden's U.S. presidential election win and hopes for further economic stimulus boosted investor sentiment. "We believe investors should expect this trend of an appreciating loonie to continue as we forecast an overall weaker period for the U.S. dollar, and stronger oil prices over the near-term," Philip Petursson, chief investment strategist and head of capital markets research at Manulife Investment Management, said in a research note. The greenback has fallen more than 2% against a basket of major currencies since the start of the month. U.S. markets were closed on Thursday for the Thanksgiving Day holiday. Canadian payroll employment rose by 337,500, or 2.2%, in September, Statistics Canada said. Still, payroll employment has declined by 1.2 million since February due to the coronavirus crisis. Bank of Canada Governor Tiff Macklem and Senior Deputy Governor Carolyn Wilkins were due to appear by videoconference before the House of Commons Standing Committee on Finance at 3:30 p.m. EST (2030 GMT). Canadian government bond yields fell across much of a flatter curve. The 10-year yield was down 2.1 basis points at 0.692%. (Reporting by Fergal Smith; Editing by Paul Simao and Andrea Ricci)

CANADA FX DEBT-C$ holds near 2-week high on higher oil prices, portfolio shifts

26 Nov 2020

(Adds strategist quotes and details throughout; updates prices) * Loonie touches its strongest since Nov. 10 at 1.2982 * Price of U.S. oil settles 1.8% higher * Canada's 10-year yield eases nearly one basis point to 0.709% By Fergal Smith TORONTO, Nov 25 The Canadian dollar was little changed against its U.S. counterpart on Wednesday, with the currency staying within reach of an earlier two-week high as oil prices rose and investors rebalanced their portfolios. The loonie was trading at 1.2990 to the greenback, or 76.98 U.S. cents, having touched its strongest intraday level since Nov. 10 at 1.2982. It has climbed 2.5% since the start of the month. The price of oil, one of Canada's major exports, rose to the highest level in more than eight months, as data showing a surprise drop in weekly U.S. crude inventories extended a rally driven by hopes that a COVID-19 vaccine will boost fuel demand. U.S. crude oil futures settled 1.8% higher at $45.71 a barrel. The Canadian dollar was supported by the "continued rally for oil prices," said Erik Bregar, director and head of FX strategy at the Exchange Bank of Canada, adding: "We had what appeared to me another wave of month-end (U.S.) dollar selling due to portfolio managers rebalancing." The greenback fell against a basket of major currencies, while global shares were on course for their best month ever, with investors cheering the prospect of a smooth handover of power after the U.S. presidential election and confident that vaccines would soon be ready. U.S. markets will be closed for the Thanksgiving holiday on Thursday. Canada's main share index is set to extend its rally over the coming year as the likely rollout of a vaccine bolsters prospects for the economically sensitive stocks that dominate the index, a Reuters poll found. Canadian service workers are faring even worse during the pandemic than previously thought, with hundreds of thousands of those who still have jobs not actually putting in any hours. Canada's 10-year yield eased nearly 1 basis point at 0.709%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

Canada's TSX to hit record high in 2021 on likely vaccine rollout: Reuters poll

25 Nov 2020

TORONTO Canada's main share index is set to extend its rally over the coming year as the likely rollout of a COVID-19 vaccine bolsters prospects for the economically sensitive financial and resource stocks that dominate the index, a Reuters poll found.

CANADA FX DEBT-C$ climbs to 2-week high as Biden transition boosts Wall Street

25 Nov 2020

(Adds strategist quotes and details throughout, updates prices) * Canadian dollar rises 0.6% against the greenback * Loonie touches its strongest since Nov. 10 at 1.3002 * Canadian bond yields rise across much of a steeper curve By Fergal Smith TORONTO, Nov 24 The Canadian dollar strengthened to a two-week high against the greenback on Tuesday, as news that U.S. President-elect Joe Biden got the formal go-ahead to begin his White House transition lifted investor sentiment. The Canadian dollar was trading 0.6% higher at 1.3003 to the greenback, or 76.91 U.S. cents. It touched its strongest intraday level since Nov. 10 at 1.3002. "Stock market gains are positive for high-beta currencies like the CAD," said Shaun Osborne, chief currency strategist at Scotiabank. High-beta assets tend to be more sensitive to changes in risk appetite than the broader market. Canada runs a current account deficit and is a major exporter of commodities, including oil. "Stocks are reflecting investor hopes that vaccine progress will pave the way for an economic rebound in the coming year," Osborne said. "Sentiment has also been cheered by signs that the presidential transition process may be starting to smooth out." The Dow Jones Industrial Average breached 30,000 points for the first time, while U.S. crude oil futures settled 4.3% higher at $44.91 a barrel. As risk appetite improved, the U.S. dollar fell against a basket of major currencies. Canadian manufacturing sales in October most likely rose by 0.6% on higher sales of petroleum and other resources, following a 1.5% gain in September, Statistics Canada said in a flash estimate. It follows a separate October flash estimate on Monday, showing wholesale trade rose 0.9%. Canadian government bond yields rose across much of a steeper curve, with the 10-year up 2.5 basis points at 0.716%. (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter Cooney)

CANADA FX DEBT-C$ advance falls short of 1.30 level as greenback rebounds

24 Nov 2020

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar rises 0.1% against the greenback * Loonie trades in a range of 1.3047 to 1.3112 * Price of U.S. oil settles 1.5% higher * Canadian bond yields rise across a steeper curve By Fergal Smith TORONTO, Nov 23 The Canadian dollar edged higher against its U.S. counterpart on Monday as the latest news of progress on a COVID-19 vaccine boosted investor sentiment, but the loonie gave back much of its earlier advance as the greenback broadly rallied. The Canadian dollar was trading 0.1% higher at 1.3085 to the greenback, or 76.42 U.S. cents. The currency, which rose 0.3% last week, traded in a range of 1.3047 to 1.3112. "At the start of the American session it looked like USD-CAD might make another run below 1.3000," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York. "But the broad USD turned higher during the American morning as gold took a tumble while equity risk appetite backed off a bit." Gold , which is traded in U.S. dollars, fell by about 1.8% as better-than-expected U.S. business activity data indicated to some investors that less monetary policy stimulus could be needed. There is enough support for the U.S. dollar at 1.3000 that it will likely take a confluence of factors such as rising equities and oil prices, as well as a weaker greenback for the loonie to move past that level, said Anderson, adding "I expect that over the next 2-3 weeks, but maybe not in this holiday-thinned week." U.S. markets will be closed for the Thanksgiving holiday on Thursday. Shares rose globally and the price of oil , one of Canada's major exports, settled 1.5% higher after AstraZeneca said its COVID-19 vaccine could be around 90% effective. A resilient financial system and a targeted response by authorities has tempered the impact of the COVID-19 pandemic on Canada's financial system, Bank of Canada Deputy Governor Toni Gravelle said. Canadian government bond yields were higher across a steeper curve. The 10-year yield rose 3.7 basis points to 0.686%. (Reporting by Fergal Smith; editing by Emelia Sithole-Matarise Editing by Nick Zieminski)

Canadian dollar pares weekly gain on 'dire' COVID-19 predictions

21 Nov 2020

TORONTO The Canadian dollar edged lower against its U.S. counterpart on Friday, giving back some of this week's advance, as a gloomy projection for domestic COVID-19 cases overshadowed higher oil prices and a bigger-than-expected increase in retail sales.

Canadian dollar gains on stimulus hopes but sticks to recent holding pattern

20 Nov 2020

TORONTO The Canadian dollar rose against the greenback on Thursday as the prospect of renewed U.S. economic stimulus talks bolstered investor sentiment, but gains were capped by the surge in global COVID-19 cases, with the currency sticking to this week's range.

CANADA FX DEBT-C$ notches 1-week high as investors bet on faster vaccine rollout

19 Nov 2020

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar gains 0.5% against the greenback * Canada's annual inflation rate rises to 0.7% in October * Price of U.S. oil settles 0.9% higher * Canadian bond yields trade mixed across a flatter curve By Fergal Smith TORONTO, Nov 18 The Canadian dollar strengthened against its U.S. counterpart on Wednesday, as positive news on a COVID-19 vaccine boosted oil prices and domestic data showing higher inflation reduced prospects of additional policy easing from the Bank of Canada. The Canadian dollar was trading 0.5% higher at 1.3041 to the greenback, or 76.68 U.S. cents. The currency touched its strongest intraday level since last Wednesday at 1.3034. Canada's annual inflation rate climbed to 0.7% in October from 0.5% in September, mainly on higher food prices, Statistics Canada said. The average of three underlying rates that are closely watched by the Bank of Canada was at 1.8%, up from 1.7%, moving closer to the central bank's 2% target. Since March, the Bank of Canada has cut interest rates to near zero and launched a large scale bond-buying program, quantitative easing, for the first time. "This morning's inflation print modestly weakened the case for monetary stimulus from the Bank of Canada, but rising oil prices and an overall improvement in risk sentiment are the key factors helping nudge the loonie closer to 1.30," said Karl Schamotta, chief market strategist at Cambridge Global Payments. The price of oil, one of Canada's major exports, rose on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported. U.S. crude oil futures settled 0.9% higher at $41.82 a barrel. Market participants are betting that COVID-19 vaccines will be rolled out faster than was previously expected, which could help unleash a surge in consumer spending and business investment, Schamotta said. Canadian government bond yields were mixed across a flatter curve, with the 10-year down 2.2 basis points at 0.716%. (Reporting by Fergal Smith Editing by Nick Zieminski and Sandra Maler)

CANADA FX DEBT-C$ gains as inflation data supports dialing back BoC crisis programs

18 Nov 2020

* Canadian dollar rises 0.1% against the greenback * Canada's annual inflation rate rises to 0.7% in October * Price of U.S. oil increases 1.2% * Canadian bond yields trade mixed across a flatter curve By Fergal Smith TORONTO, Nov 18 The Canadian dollar rose against the greenback on Wednesday as positive news on a COVID-19 vaccine boosted oil prices and after data showing higher underlying inflation supported the Bank of Canada's decision to cut back on emergency stimulus measures. Canada's annual inflation rate rose to 0.7% in October from 0.5% in September, mainly on higher food prices, Statistics Canada said, while the average of three underlying measures that are closely watched by the Bank of Canada was up at 1.8% year-over-year from 1.7%. "Core inflation has been very resilient over the pandemic period so far," said Derek Holt, vice president of capital markets economics at Scotiabank. It justifies the Bank of Canada "backing away from some of the stimulus measures so far," Holt said. Last month, the central bank reduced its bond-buying program to C$4 billion per week from C$5 billion. Some other emergency measures to support financial markets during the coronavirus crisis have been wound down. The price of oil, one of Canada's major exports, rose on hopes OPEC and its allies will delay a planned increase in oil output and after Pfizer said its COVID-19 vaccine was more effective than previously reported. U.S. crude prices were up 1.2% at $41.94 a barrel, while the Canadian dollar was trading 0.1% higher at 1.3090 to the greenback, or 76.39 U.S. cents. The currency traded in a range of 1.3056 to 1.3117. Canadian home prices rose 1.3% in October from September, the Teranet-National Bank Composite House Price Index showed. That was the strongest gain for an October in the index's 22 years. Canada's retail sales report for September is due on Friday. Canadian government bond yields were mixed across a flatter curve, with the 10-year down 4.2 basis points at 0.696%. (Reporting by Fergal Smith Editing by Nick Zieminski)

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