July 10, 2020 / 8:11 PM / a month ago

CANADA FX DEBT-Canadian dollar recovers from 10-day low after record jobs gain

 (Adds strategist comment and details throughout; updates
prices)
    * Canadian dollar trades near flat against the greenback
    * Loonie touches its weakest level since June 30 at 1.3631
    * Canada adds 952,900 jobs in June
    * Canada-U.S. 30-year spread widens by 2.5 basis points

    By Fergal Smith
    TORONTO, July 10 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday, recovering from
an earlier 10-day low as higher oil and stock prices, as well as
domestic data showing a record jobs gain offset worries about
global trade prospects.
    Canada's economy added 952,900 jobs in June, mostly in the
service sector, as firms reopened following closures triggered
by COVID-19, data from Statistics Canada showed. Economists had
expected an increase of 700,000.             
    U.S. stocks rose as a positive update from Gilead Sciences
Inc's          antiviral drug to treat COVID-19 countered nerves
over a record rise in coronavirus cases in the United States.
                
    The price of oil, one of Canada's major exports, rose after
the International Energy Agency (IEA) bumped up its 2020 demand
forecast.             
    U.S. crude oil futures        settled 2.4% higher at $40.55
a barrel, while the loonie        was trading nearly unchanged
at 1.3590 to the greenback, or 73.58 U.S. cents. It touched its
weakest intraday level since June 30 at 1.3631.
    U.S. President Donald Trump said he is not currently
thinking about negotiating a "Phase 2" trade deal with China.
            
    The news knocked commodity currencies, such as the loonie,
lower but was unlikely to have a lasting impact because
investors were already skeptical that a "Phase 2" deal would be
reached, said Bipan Rai, North America head, FX strategy at CIBC
Capital Markets.
    For the week, the loonie declined 0.3%.    
    Canada's 30-year yield             eased 2.5 basis points
further below the yield on 30-year U.S. Treasury bonds to a
spread of 25.9 basis points as the Bank of Canada announced an
increase in the amount of 30-year bonds it would purchase in its
quantitative easing program to C$600 mln.
    On Wednesday, the 30-year yield spiked after Ottawa said it
would be "significantly increasing" issuance of long-term bonds.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Marguerita Choy)
  
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