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6 months ago
CANADA FX DEBT-C$ hangs on as greenback surges after Trump, Fed comments
February 9, 2017 / 9:53 PM / 6 months ago

CANADA FX DEBT-C$ hangs on as greenback surges after Trump, Fed comments

(Adds trader comment, details; updates prices to close)
    * Canadian dollar settles at C$1.3141, or 76.10 U.S. cents
    * Bond prices lower across flatter yield curve

    By Alastair Sharp
    TORONTO, Feb 9 (Reuters) - The Canadian dollar posted a
narrow gain as its U.S. counterpart surged against other key
currencies on Thursday after greenback-boosting comments from
U.S. President Donald Trump and a Federal Reserve policymaker.
    The commodity-linked Canadian dollar was supported by higher
oil prices as an unexpected draw in U.S. gasoline inventories
pointed to higher demand in the world's biggest oil market.
    The loonie, as Canada's currency is colloquially
known, settled at C$1.3141 per U.S. dollar, or 76.10 U.S. cents,
stronger than Wednesday's close of C$1.3155, or 76.02 U.S.
cents.
    "It's surprising given the (U.S.) dollar strength against
other currency pairs after Trump's tax comments and after
(Chicago Fed President Charles) Evans' remarks about three rate
hikes in 2017 not being unreasonable," said David Bradley,
director of foreign exchange trading at Scotiabank.
    The currency traded between C$1.3094 to C$1.3167 having
rebounded from its weakest in two weeks on Tuesday of C$1.3213.
    The greenback posted its best one-day gain against the yen
in three weeks and also climbed against the euro, British pound
and Swiss franc after Trump said he would make a major
announcement on a "phenomenal" tax plan in the next few weeks.
 
    Chicago Fed President Charles Evans, a voter on policy this
year, told reporters it is reasonable to expect the Fed to hike
rates three times this year, in part because the early direction
of U.S. fiscal policies appear to be positive for the economy.
 
    Also on Thursday, Bank of Canada Deputy Governor Lawrence
Schembri said official interest rates here are low enough to
stimulate growth and close the output gap by the middle of 2018.
 
    Attention for loonie traders will now turn to Canada's
employment report for January, due on Friday, which is expected
to show no change after 2016's strong second half. 
    "If we do get a significantly weak number tomorrow then
maybe we'll trade back up toward C$1.32," Scotia's Bradley said.
    Benchmark Brent crude settled up 51 cents at $55.63
per barrel. U.S. light crude settled 66 cents higher at
$53 a barrel. 
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as the number of
Americans filing for unemployment benefits unexpectedly fell
last week to near a 43-year low. 
    The two-year fell 6 Canadian cents to yield 0.754
percent and the 10-year declined 52 Canadian cents
to yield 1.681 percent.
    The 10-year yield touched a two-month low at 1.607 percent
on Wednesday.

 (Additional reporting by Fergal Smith, editing by G Crosse)

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