TORONTO Inversion of Canada's yield curve by the most in nearly two decades is threatening to coerce the Bank of Canada to cut interest rates rather than risk an economic downturn, portfolio managers said on Wednesday.
TORONTO, Aug 15 Inversion of Canada's yield
curve by the most in nearly two decades is threatening to coerce
the Bank of Canada to cut interest rates rather than risk an
economic downturn, portfolio managers said on Wednesday.
TORONTO The Canadian dollar will strengthen against its U.S. counterpart over the coming year, recouping ground lost since July, as Canada's economy stays strong enough to withstand global trade uncertainty, a Reuters poll predicted.
TORONTO The high debt loads and depleted savings of Canadians look set to crimp their spending for as long as decades, economists say, with consumers already scaling back after borrowing costs began to rise in 2017.
TORONTO, July 24 The Canadian dollar, this
year's best performing G10 currency, is threatening to ruin the
Bank of Canada's plan to sit out global interest rate cuts,
after a rally since May that risks undercutting an expected
pickup in exports.
(Adds market player quotes and details; updates prices)
* Canadian dollar falls 0.3% against the greenback
* Canadian retail sales decline 0.1% in May
* U.S. oil futures increase by 0.6%
* Canada-U.S. 2-year spread widens by 3.9 basis points
By Fergal Smith
TORONTO, July 19 The Canadian dollar weakened
against its U.S. counterpart on Friday, pulling back from a near
nine-month high hit earlier in the day, as domestic data showed
a surprise decline in May retail sales and the greenback broadly
The value of Canadian retail trade dipped by 0.1% versus an
estimated 0.3% increase, as unusually bad weather hit sales of
food, drink and clothing.
"The report casts some doubt on the resiliency of the
consumer sector to the ongoing parade of worrisome geopolitical
and trade developments," Ryan Brecht, a senior economist at
Action Economics, said in a research note.
Canada's economy has showed signs of picking up in the
second quarter after a slowdown at the turn of the year, even as
a more uncertain outlook for trade has weighed on the global
The U.S. dollar rose against a basket of currencies
as fears of a larger-than-expected 50-basis-point interest rate
cut in July abated after the New York Federal Reserve downplayed
dovish comments from its president on Thursday.
"There has been a generalized rebound in the dollar and
Canada has been affected by that, too," said Alvise Marino, a
foreign exchange strategist at Credit Suisse in New York.
At 4:10 p.m. (2010 GMT), the Canadian dollar was
trading 0.3% lower at 1.3060 to the greenback, or 76.57 U.S.
cents. The currency's weakest level of the session was 1.3110,
while it touched its strongest since Oct. 25, at 1.3016.
For the week, the loonie was down 0.2%.
The Canadian dollar lost ground on Friday even as the price
of oil, one of Canada's major exports, rose. U.S. crude oil
futures settled 0.6% higher at $55.63 a barrel on rising
tensions between the United States and Iran.
Still, speculators have raised bullish bets on the currency
to the highest since March 2018, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of July 16, net long positions in the loonie rose to 20,964
contracts from 9,226 contracts in the prior week.
Canadian government bond prices dipped across much of the
yield curve, with the 10-year falling 2 Canadian
cents to yield 1.502%.
The 10-year yield touched its lowest intraday level since
July 5 at 1.485%, while the gap between Canada's 2-year yield
and its U.S. equivalent widened by 3.9 basis points to a spread
of 36.2 basis points in favor of the U.S. bond.
(Reporting by Fergal Smith; additional reporting by Levent
Editing by Leslie Adler)
TORONTO, July 16 The Bank of Canada announced on
Tuesday its intention to become the administrator of the
Canadian Overnight Repo Rate Average (CORRA), a reference rate
for financial market transactions, when enhancements to
CORRA take effect next year.
(Adds strategist quote and details throughout; updates prices)
* Canadian dollar rises 0.1% against the greenback
* Canadian new home prices dip 0.1% in May
* Price of U.S. oil decreases 0.4%
* Canadian bond prices fall across a steeper yield curve
By Fergal Smith
TORONTO, July 11 The Canadian dollar firmed
against its U.S. counterpart on Thursday, approaching last
week's eight-month high, as investors focused on the less-dovish
policy guidance coming from the Bank of Canada compared with
that of the Federal Reserve.
At 4:16 p.m. (2016 GMT), the Canadian dollar was
trading 0.1% higher at 1.3062 to the greenback, or 76.56 U.S.
cents. The currency, which last Thursday notched an eight-month
high at 1.3038, traded in a range of 1.3042 to 1.3080.
The outlook for the U.S. dollar remained grim after
Federal Reserve Chair Jerome Powell's bleak comments on the U.S.
economy, which bolstered expectations of an interest rate cut
later this month.
In contrast, the Bank of Canada made clear on Wednesday it
had no intention of easing monetary policy even as it
highlighted the risks that trade wars posed to the global
"If you look at the relative monetary policy, Canada versus
the U.S., it still looks like divergence," said Erik Bregar,
head of FX strategy at the Exchange Bank of Canada.
Chances of an interest rate cut this year by the Bank of
Canada were less than 35%, data from the overnight index swaps
market showed. Over the same period, the market expects at least
two rate cuts from the Fed.
The price of oil, one of Canada's major exports, fell as
OPEC forecast slower demand for its crude next year. U.S. crude
oil futures settled 0.4% lower at $60.20 a barrel.
New home prices in Canada declined 0.1% in May, after prices
were flat for the previous three months, Statistics Canada said.
Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries, after data showed
U.S. underlying consumer prices increased by the most in nearly
1-1/2 years in June.
The two-year fell 3 Canadian cents to yield
1.602% and the 10-year was down 35 Canadian cents to
(Reporting by Fergal Smith; Additional reporting by Levent
Uslu; Editing by Peter Cooney)
(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar rises 0.4% against the greenback
* Bank of Canada leaves its policy rate on hold at 1.75%
* Price of U.S. oil increases 4.5%
* Canada's yield curve steepens
By Fergal Smith
TORONTO, July 10 The Canadian dollar
strengthened against its broadly weaker U.S. counterpart on
Wednesday, moving closer to last week's eight-month high, as the
Bank of Canada showed no sign that it would match potential
interest rate cuts from the U.S. Federal Reserve.
The Bank of Canada left its benchmark interest rate on hold
at 1.75% as expected and made clear it had no intention of
easing monetary policy, while highlighting the risks trade wars
posed to the global economy.
Meanwhile, Fed Chairman Jerome Powell reinforced
expectations the U.S. central bank will cut interest rates for
the first time in a decade at its next monetary policy meeting
later this month, saying trade uncertainties and concerns about
the global outlook continued to exert pressure on the American
It's a "contrasting story of central bank prospects," said
Shaun Osborne, chief currency strategist at Scotiabank. "It
seems quite possible that we are going to get a pretty
meaningful series of interest rate reductions from the Fed going
forward here, and the Bank of Canada, in contrast, is suggesting
that to a large extent it is going to sit this one out."
While chances of an interest rate cut this year by the Bank
of Canada rose to 35% from 20% before the interest rate
announcement, that fell well short of expected tightening over
the same period by the Fed. Investors see at least two Fed rate
hikes by December.
At 4:21 p.m. (2021 GMT), the Canadian dollar was
trading 0.4% higher at 1.3080 to the greenback, or 76.45 U.S.
cents. The currency, which last Thursday touched an eight-month
high at 1.3038, traded in a range of 1.3063 to 1.3145.
Adding to support for the loonie, the price of oil, one of
Canada's major exports, was boosted by data showing U.S. crude
inventories shrank and as major producers cut nearly a third of
offshore Gulf of Mexico production ahead of an expected storm.
U.S. crude oil futures settled up 4.5% at $60.43 a
Canada's yield curve steepened in sympathy with the U.S.
curve. The two-year rose 10.5 Canadian cents to yield
1.583% and the 10-year was flat to yield 1.584%.
(Reporting by Fergal Smith; editing by David Gregorio,
Bernadette Baum and Jonathan Oatis)
OTTAWA/TORONTO, July 10 The Bank of Canada on
Wednesday looks set to raise its second-quarter economic growth
forecast and stand pat on interest rates, taking a different
tack from some major peers, which are signaling plans for