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CANADA FX DEBT-C$ posts 8-week high ahead of Fed rate decision
December 14, 2016 / 2:45 PM / 9 months ago

CANADA FX DEBT-C$ posts 8-week high ahead of Fed rate decision

* Canadian dollar at C$1.3110, or 76.28 U.S. cents
    * Loonie touches its strongest since Oct. 19 at C$1.3093
    * Bond prices higher across a flatter yield curve

    TORONTO, Dec 14 (Reuters) - The Canadian dollar strengthened
to an eight-week high against its U.S. counterpart on Wednesday
as broader losses for the greenback ahead of a Federal Reserve
interest rate decision eclipsed a dip in oil prices and mixed
domestic data.
    The U.S. dollar lost ground against a basket of major
currencies as investors braced for the first Fed rate increase
in a year and weighed what the central bank may do in 2017.
 
    The loonie has gained steadily in recent weeks on the back
of higher prices for oil, a major Canadian export.
    But oil pared some recent gains following a reported rise in
U.S. crude inventories and as OPEC signaled a growing crude
surplus next year unless production cuts are implemented. 
    
    U.S. crude prices were down 1.57 percent at $52.15 a
barrel.
    At 9:26 a.m. EDT (1426 GMT), the Canadian dollar 
was trading at C$1.3110 to the greenback, or 76.28 U.S. cents,
stronger than Tuesday's close of C$1.3133, or 76.14 U.S. cents.
    The currency's weakest level of the session was C$1.3140,
while it touched its strongest since Oct. 19 at C$1.3093.
    Canadian household debt as a share of income hit another
record in the third quarter as the pace of borrowing outstripped
wage gains, data from Statistics Canada showed. The ratio of
debt to disposable income rose to 166.9 percent from an adjusted
166.4 percent in the second quarter. 
    In separate data, Canadian home prices rose in November from
a month earlier as prices continued to soar in Toronto, the
Teranet-National Bank Composite House Price Index showed, while
lending activity to small businesses in Canada declined in
October. 
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with Treasuries. The two-year 
price rose 1.5 Canadian cents to yield 0.769 percent and the
benchmark 10-year climbed 36 Canadian cents to yield
1.714 percent.
    On Tuesday, the 10-year yield touched its highest since June
2015 at 1.794 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)

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