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Fergal Smith

Canadian dollar weakens as markets fret about global growth outlook

14 Dec 2018

TORONTO The Canadian dollar lost ground against its broadly stronger U.S. counterpart on Friday as investors worried about signs of slower global growth and braced for a potential interest rate hike next week from the Federal Reserve.

CANADA FX DEBT-C$ clings to Wednesday's rally amid competing forces

13 Dec 2018

(Adds strategist quote and details throughout; updates prices) * Canadian dollar near flat against the greenback * Price of U.S. oil rises 2.8 percent * Canadian new home prices were unchanged in October * Canadian bond prices trade mixed across a steeper yield curve By Fergal Smith TORONTO, Dec 13 The Canadian dollar was little changed against its U.S. counterpart on Thursday, holding onto the previous day's gains as higher oil prices offset caution on Wall Street. The price of oil, one of Canada's major exports, climbed after data showed inventory declines in the United States and as investors began to expect that the global oil market could have a deficit sooner than they had previously thought. U.S. crude oil futures settled 2.8 percent higher at $52.58 a barrel. Last week, the Bank of Canada worried about the impact on the economy of a sharp fall in oil prices since October and production cuts in Canada's energy sector, as it left interest rates on hold and suggested the pace of future hikes could be more gradual. "You have got some modest recovery in oil prices which is helping to support the Canadian dollar but then at the same time it looks like still a somewhat cautious broader market mood, and that's perhaps restraining the Canadian dollar," said Eric Viloria, an FX strategist at Crédit Agricole CIB in New York. U.S. stocks edged lower in volatile trading on Thursday, as a rally sparked by progress in U.S.-China trade talks faded. In addition to being a major commodities exporter, Canada runs a current account deficit, so its economy could be hurt if the global flow of trade or capital slows. At 3:18 p.m. (2018 GMT), the Canadian dollar was trading nearly unchanged at 1.3351 to the greenback, or 74.90 U.S. cents. The currency traded in a narrow range of 1.3338 to 1.3383. On Wednesday, the Canadian dollar gained ground against a broadly weaker greenback. The U.S. dollar steadied on Thursday after the European Central Bank promised to maintain policy support for the euro zone due to risks from trade tensions, Brexit and budget woes in Italy and France. In domestic data, new home prices were unchanged in October for the third month in a row, Statistics Canada said. Canadian government bond prices were mixed across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year fell 10 Canadian cents to yield 2.146 percent. Last Thursday, the 10-year yield touched its lowest in nearly one year at 2.026 percent. (Reporting by Fergal Smith; editing by Grant McCool)

CANADA FX DEBT-C$ climbs as investors dump greenback for riskier assets

12 Dec 2018

(Adds strategist quotes, details throughout; updates prices) * Canadian dollar rises 0.3 percent against the greenback * Price of U.S. oil falls nearly 1 percent * Canada's industry capacity use fell to 82.6 percent in Q3 * Canadian bond prices trade lower across steeper yield curve By Fergal Smith TORONTO, Dec 12 The Canadian dollar strengthened against its U.S. counterpart on Wednesday as the greenback broadly declined, and as stocks got a boost from optimism over trade negotiations between the United States and China. The U.S. dollar declined against a basket of major currencies as expectations that British Prime Minister Theresa May would survive a no-confidence vote on her leadership helped boost the pound. "What we are seeing is the Canadian dollar strengthening in an environment of broad-based U.S. dollar weakness," said Eric Theoret, a currency strategist at Scotiabank. "In an environment of risk appetite you typically do tend to see the U.S. dollar weaken as people get out of the (safe) havens and into riskier assets." U.S. stocks jumped about 1.6 percent on Wednesday, bolstered by the technology sector, as signs Beijing would ease its "Made in China 2025" industrial policy added to optimism fueled by President Donald Trump's upbeat comments on trade talks. News on Tuesday that a top executive of Chinese telecoms giant Huawei Technologies Co Ltd was granted bail by a Canadian court, 10 days after her arrest in Vancouver at the request of U.S. authorities, helped bolster market sentiment, Theoret said. Canada exports many commodities, including oil, and runs a current account deficit, so its economy stands to benefit if the outlook improves for the global flow of trade and capital. The price of oil turned lower after getting an earlier boost from an industry report that showed a drop in U.S. crude inventories. U.S. crude oil futures settled nearly 1 percent down at $51.15 a barrel. At 3:34 p.m. (2034 GMT), the Canadian dollar was trading 0.3 percent higher at 1.3349 to the greenback, or 74.91 U.S. cents. Last Thursday, the loonie touched its weakest level in nearly 18 months at 1.3445 to the U.S. dollar after Bank of Canada Governor Stephen Poloz said the economy was less strong than forecast. Canadian industry ran at 82.6 percent of capacity in the third quarter, below a downwardly revised 84.1 percent in the second quarter, Statistics Canada said on Wednesday. Separately, the Teranet-National Bank Composite House Price Index showed that Canadian home prices fell 0.3 percent in November from October, the second straight month of decline. Canadian government bond prices were lower across a steeper yield curve in sympathy with U.S. Treasuries. The 10-year declined 29 Canadian cents to yield 2.115 percent. (Reporting by Fergal Smith; Editing by Steve Orlofsky and Jonathan Oatis)

CANADA FX DEBT-C$ firms as market weighs trade and political signals

11 Dec 2018

(Adds strategist quotes and details on activity; updates prices) * Canadian dollar rises 0.1 percent against the greenback * Price of U.S. oil rises 1.3 percent * Canadian bond prices fall across the yield curve * Canada-U.S. 10-year spread reaches its widest since May 2017 By Fergal Smith TORONTO, Dec 11 The Canadian dollar edged higher against its U.S. counterpart on Tuesday as oil prices rose, but mixed signals for the market from the trade and political spheres helped keep the currency near a 1-1/2-year low it hit last week. The S&P 500 gave up some gains after U.S. President Donald Trump's threat to shut down the government over funding for a border wall undid the boost to markets from optimism over China-U.S. trade talks. "The market has been whipped around by trade uncertainty and the overall equity moves today," said Erik Nelson, a currency strategist at Wells Fargo. It's "not terribly surprising to see CAD follow suit." Canada is a major exporter of commodities, including oil, and runs a current account deficit, so its economy could benefit from an improved outlook for the global flow of trade or capital. The price of oil also pared some of its gains amid worries of a possible U.S. government shutdown. Still, crude oil futures , which fell sharply the day before, settled 1.3 percent higher at $51.65 a barrel. At 3:03 p.m. (2003 GMT), the Canadian dollar was up 0.1 percent at 1.3394 to the greenback, or 74.66 U.S. cents. The currency traded in a range of 1.3379 to 1.3423. Last Thursday, the loonie touched its weakest level in nearly 18 months at 1.3445 after the Bank of Canada suggested the pace of future interest rate hikes could be more gradual. Speculators have added to their bearish bets on the Canadian dollar for the fourth straight week, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Monday. As of Dec. 4, net short positions had increased to 12,936 contracts from 8,630 a week earlier. Canadian government bond prices were lower across the yield curve, with the 10-year falling 15 Canadian cents to yield 2.077 percent. The gap between Canada's 10-year yield and its U.S. equivalent widened by 1.2 basis points to a spread of 80.8 basis points in favor of the U.S. bond, its widest since May 2017. (Reporting by Fergal Smith; Editing by Peter Cooney)

Canadian dollar weakens as investor sentiment ebbs on Brexit vote delay

10 Dec 2018

TORONTO The Canadian dollar weakened against its U.S. counterpart on Monday, as the delaying of a key Brexit vote weighed on risk appetite and the spread between Canada's two- and five-year yields turned negative for the first time since September 2007.

CANADA FX DEBT-C$ jumps as record jobs gain catches market cold

07 Dec 2018

(Adds dealer quotes and details throughout; updates prices) * Canadian dollar rises 0.5 percent against greenback * Canada adds a record 94,100 jobs in November * Price of U.S. oil rises 2.2 percent * Canadian bond prices trade mixed across flatter yield curve * Canada-U.S. 2-year spread narrows by 5 basis points By Fergal Smith TORONTO, Dec 7 The Canadian dollar strengthened against its U.S. counterpart on Friday after domestic data showing a record increase in jobs caught the foreign exchange market by surprise, pressuring investors who had been short the loonie. The Canadian economy added 94,100 jobs in November on higher full-time hiring, and the unemployment rate dipped to a new all-time low of 5.6 percent, Statistics Canada said. Economists had forecast a jobs gain of 11,000. Meanwhile, U.S. data showed that job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity. "I think the market had been pretty heavily leaning toward a continuation of weak (Canadian) data and strong U.S. data when they were thrown a complete curveball," said Michael Goshko, corporate risk manager at Western Union Business Solutions. "Given the fact that we had just made a one-and-a-half year high the previous day (for USD-CAD), I think the market was pretty long (U.S.) dollars." The most recent data from the U.S. Commodity Futures Trading Commission and Reuters calculations have showed that speculators were adding to bearish bets on the loonie. At 4:00 p.m. (2100 GMT), the Canadian dollar was trading 0.5 percent higher at 1.3312 to the greenback, or 75.12 U.S. cents. The currency traded in a range of 1.3285 to 1.3400. For the week, the loonie was down 0.2 percent. It hit its lowest in nearly 18 months on Thursday at 1.3445, following an interest rate decision the day before by the Bank of Canada. The central bank, which has hiked five times since July 2017, left its benchmark rate on hold at 1.75 percent and dampened expectations for additional hikes. On Thursday, Bank of Canada Governor Stephen Poloz said the economy was weaker than forecast and predicted that lower prices for oil, one of Canada's major exports, would cut growth. But the price of oil rallied on Friday after major oil producers agreed to reduce output. U.S. crude oil futures settled 2.2 percent higher at $52.61 a barrel. Canadian government bond prices were mixed across a flatter yield curve, with the two-year down 2 Canadian cents to yield 2.002 percent and the 10-year rising 18 Canadian cents to yield 2.071 percent. The gap between Canada's two-year yield and its U.S. equivalent narrowed by 5 basis points to a spread of 71.7 basis points in favor of the U.S. bond. (Reporting by Fergal Smith; Editing by Bernadette Baum)

CANADA FX DEBT-C$ jumps as jobs data, oil rally bolster rate-hike bets

07 Dec 2018

* Canadian dollar rises 0.6 percent against greenback * Canada adds a record 94,100 jobs in November * Price of U.S. oil rises 4.2 percent * Canadian bond prices fall across flatter yield curve * Gap between 2- and 10-year yields narrows to 7.3 basis points By Fergal Smith TORONTO, Dec 7 The Canadian dollar strengthened against its U.S. counterpart on Friday as higher oil prices and data showing a record increase in domestic jobs bolstered expectations for further interest rate hikes from the Bank of Canada. Expectations for rate hikes had moderated this week after the Bank of Canada left rates on hold on Wednesday and fretted about the impact on the economy of a sharp drop in the price of oil, one of Canada's major exports, since October. "We still have to deal with the coming negative hit to the economy from Alberta's production cuts in Q1 (first quarter), so I think that's going to remain the Bank of Canada's focus," said Derek Holt, vice president of capital markets economics at Scotiabank. "But at the margin if we keep getting numbers like this, it could well keep the bank on track to hiking." Chances of a rate hike in March rose to 43 percent from 33 percent before the employment data. At 9:20 a.m. (1420 GMT), the Canadian dollar was trading 0.6 percent higher at 1.3304 to the greenback, or 75.17 U.S. cents. The currency, which Thursday hit its lowest in nearly 18 months at 1.3445, traded in a range of 1.3285 to 1.3400. The Canadian economy added 94,100 jobs in November on higher full-time hiring, and the unemployment rate dipped to a new all-time low of 5.6 percent, Statistics Canada said. Economists had forecast a jobs gain of 11,000. Oil prices jumped as big Middle East producers in the Organization of the Petroleum Exporting Countries agreed to reduce output to drain global fuel inventories and support the market. U.S. crude prices were up 4.2 percent at $53.67 a barrel. The U.S. dollar erased gains against a basket of major currencies after data showed U.S. job growth slowed in November and monthly wages increased less than expected, suggesting some moderation in economic activity that could support expectations of fewer interest rate increases from the Federal Reserve in 2019. Canadian government bond prices were lower across a flatter yield curve, with the two-year price down 8.2 Canadian cents to yield 2.036 percent and the benchmark 10-year falling 14 Canadian cents to yield 2.109 percent. The gap between Canada's 2-year yield and its 10-year yield narrowed by 2.8 basis points to a spread of 7.3 basis points, its narrowest since September 2007. (Reporting by Fergal Smith; Editing by Bernadette Baum)

CANADA FX DEBT-C$ hits 18-month low as rate hike bets crumble

06 Dec 2018

(Adds dealer quote and details throughout; updates prices) * Loonie touches its lowest since June 12, 2017 at 1.3445 * U.S. oil prices fall 2.7 percent in volatile trade as OPEC meets * Canada's 10-year yield touches its lowest in nearly one year * Bank of Canada frets low oil prices By Fergal Smith Dec 6 The Canadian dollar fell to a nearly 18-month low against its U.S. counterpart on Thursday, as oil and stock prices declined and investors slashed bets that the Bank of Canada would raise interest rates as soon as January. Expectations for more interest rate hikes in Canada tumbled after Bank of Canada Governor Stephen Poloz said the central bank would need to assess the impact of lower oil prices and as a new threat emerged to U.S.-China trade relations. Chances of an interest rate hike at the central bank's next meeting in January slumped to 10 percent from about 60 percent before an interest announcement on Wednesday, when the central bank left its benchmark interest rate on hold at 1.75 percent and was more dovish than some investors expected. "The statement from the bank earlier this week was one of the main factors pushing the Canadian dollar lower, on top of, as you can imagine, the stock market weakness," said Simon Côté, managing director, risk management solutions, National Bank Financial. Stocks fell as the arrest of a top Chinese technology executive stirred fears of fresh tensions between the United States and China over trade. Canada exports many commodities, including oil, so its economy could be hurt if the global flow of trade or capital slows. U.S. crude oil futures settled 2.7 percent lower at $51.49 a barrel after major oil producers ended a meeting without announcing a decision to cut crude output. At 3:56 p.m. (2056 GMT), the Canadian dollar was trading 0.1 percent lower at 1.3371 to the greenback, or 74.79 U.S. cents. The currency hit its weakest intraday level since June 12, 2017 at 1.3445. The decline for the loonie came as data showed that Canada's trade deficit widened in October to C$1.17 billion. Separate data showed that the pace of purchasing activity in Canada expanded at a slower pace in November. Canada's employment report for November is due on Friday. The Canadian dollar will rally over the coming year if oil prices recover and the Bank of Canada continues lifting interest rates, according to a poll of currency strategists who have become less bullish on prospects for the currency. Canadian government bond prices were higher across the yield curve, with the 10-year rising 43 Canadian cents to yield 2.084 percent. The 10-year yield touched its lowest intraday since Dec. 28 at 2.026 percent. (Additional reporting by Saqib Iqbal Ahmed; Editing by Bernadette Baum and Alistair Bell)

Investors slash Bank of Canada rate hike bets as Poloz frets on oil

06 Dec 2018

TORONTO Expectations for more interest rate hikes in Canada tumbled on Thursday after Bank of Canada Governor Stephen Poloz said the central bank would need to assess the impact of lower oil prices and as a new threat emerged to U.S.-China trade relations.

CANADA FX DEBT-C$ hits 18-month low as investors slash rate hike bets

05 Dec 2018

(Updates prices) * Canadian dollar falls 0.8 percent against the greenback * Bank of Canada leaves policy rate on hold at 1.75 percent * Loonie hits its lowest since June 2017 at 1.3400 * Canada's 10-year yield hits a 4-1/2-month low at 2.118 percent * Price of U.S. oil falls 0.7 percent By Fergal Smith TORONTO, Dec 5 The Canadian dollar weakened to a 1-1/2 year low against the greenback on Wednesday as investors slashed expectations for further interest rate hikes from the Bank of Canada after a dovish announcement from the central bank. The Bank of Canada kept its benchmark interest rate on hold at 1.75 percent, as expected, and said there might be more room for non-inflationary growth, suggesting the pace of future hikes could be more gradual. "From where we were last time out, things are a little bit more dovish in tone, and, not surprisingly we've seen the Canadian dollar weaken in the wake of that," said Michael Gregory, a senior economist at BMO Capital Markets. Chances of a hike in January slumped from about 60 percent before the data to 35 percent, the overnight index swaps market indicated. At 3:39 p.m. (2039 GMT), the Canadian dollar was trading 0.8 percent lower at 1.3377 to the greenback, or 74.76 U.S. cents. The currency touched its weakest since June 2017 at 1.3400. The loonie weakened as global stocks were pressured by renewed worries about trade tensions and as the U.S. dollar strengthened against a basket of major currencies. The price of oil, one of Canada's major exports, weakened ahead of a meeting of the world's biggest exporters which will discuss cutting output to help shore up prices and curb excess supply. U.S. crude oil futures settled 0.7 percent lower at $52.89 a barrel. Alberta's decision to mandate output cuts to reduce a glut will hurt North American producers of lighter oil used for blending and U.S. refiners importing crude via rail, even as several major Canadian energy companies cheered the move. Canadian government bond prices rose across the yield curve, with the two-year up 12.5 Canadian cents to yield 2.051 percent and the 10-year rising 43 Canadian cents to yield 2.120 percent. The 10-year yield hit its lowest intraday level since July 19 at 2.118 percent. U.S. markets were closed on Wednesday to honor former U.S. President George H.W. Bush, who died last Friday. (Reporting by Fergal Smith; Editing by Richard Chang)

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