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CANADA FX DEBT-C$ edges higher as exports jump
May 4, 2017 / 1:34 PM / 5 months ago

CANADA FX DEBT-C$ edges higher as exports jump

    * Canadian dollar at C$1.3721, or 72.88 U.S. cents
    * Bond prices lower across the yield curve
    * 2-year spread vs Treasuries at its widest in 10 years

    By Fergal Smith
    TORONTO, May 4 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday, finding some respite
after hitting a 14-month low earlier this week, as data showing
that the country's trade deficit had narrowed sharply offset
lower oil prices.
    Canada posted a trade deficit of C$135 million in March,
down from a revised C$1.08 billion shortfall in February, as
exports hit a record high on energy shipments, Statistics Canada
said.
    "A strong first indicator on March GDP (gross domestic
product) suggests that there could be some decent momentum
heading into the second quarter," said Nick Exarhos, economist
at CIBC Capital Markets.
    Economists expect gross domestic product to grow as much as
4 percent in the first quarter. But recent strength in the
domestic economy has been overshadowed by a more uncertain trade
outlook, mortgage lender concerns and lower prices of oil, one
of Canada's major exports.
    U.S. crude oil prices        fell to a four-month low, down
2.05 percent at $46.84 a barrel, after U.S. crude inventories
fell by less than expected.             
    At 9:19 a.m. ET (1319 GMT), the Canadian dollar          was
trading at C$1.3721 to the greenback, or 72.88 U.S. cents, up
0.1 percent, according to Reuters data.
    The currency traded in a range of C$1.3701 to C$1.3746.
    On Tuesday it had slumped to a fresh 14-month low at
C$1.3758.
    Still, the Canadian dollar will weather a "perfect storm" to
regain some ground over the coming months, a Reuters poll showed
on Wednesday, as a pickup in the domestic economy could prod the
Bank of Canada to raise interest rates by next year.
            
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as investors raised bets
on a Federal Reserve interest rate hike in June.             
    The two-year            dipped 1.5 Canadian cents to yield
0.709 percent and the 10-year             declined 15 Canadian
cents to yield 1.561 percent.
    The 2-year yield fell 2.1 basis points further below its
U.S. equivalent to a spread of -61.7 basis points, its widest
since April 2007.
    Canada's April employment report is due on Friday.         

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
 

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