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Fergal Smith

Canada's currency steadies, energy shares recoup post-election decline

22 Oct 2019

TORONTO The Canadian dollar was little changed against the greenback on Tuesday, holding near an earlier three-month high, as Canada's energy shares overcame worries that new oil pipeline development would become more difficult after the federal election.

Bank of Canada rate cut bets sink as investors eye post-election spending

22 Oct 2019

TORONTO Investors are ditching bets that the Bank of Canada will cut interest rates over the coming months as the domestic economy shows resilience and the federal election result adds to prospects of growth-boosting fiscal spending next year.

C$ pulls back from 3-month high as investors fret about oil pipeline prospects

22 Oct 2019

TORONTO, Oct 22 The Canadian dollar weakened against its U.S. counterpart on Tuesday after domestic data showed a surprise drop in retail sales and as investors worried that a minority government would make building of new oil pipelines more difficult.

Canadian dollar holds near three-month high after Trudeau election win; no relief for energy stocks

22 Oct 2019

TORONTO The Canadian dollar held near a three-month high on Tuesday as the market took in stride the prospect of a re-elected Liberal government, although some investors worried about the Liberals' need to rely on a left-leaning opposition party for support.

CANADA FX DEBT-Loonie rallies to 3-month high as Canadians vote in general election

21 Oct 2019

(Adds dealer quotes and details throughout; updates prices) * Canadian dollar rises 0.3% against the greenback * Loonie notches its strongest level since July 22 * Easing of U.S.-China trade tensions supports CAD * Canadian bond prices fall across the yield curve By Fergal Smith Oct 21 The Canadian dollar climbed to a near three-month high against its U.S. counterpart on Monday as investors became more optimistic on global trade and millions of Canadians cast their ballots in the country's 43rd general election. The benchmark S&P 500 stock index rose within striking distance of a record high as further signs of progress toward a resolution of the trade dispute between the United States and China helped boost shares in trade-exposed and economically sensitive sectors. "If the two trade situations, with Brexit and with the U.S. and China, do get to an end point where they are positive for global trade, that's automatically beneficial for the Canadian dollar and the Canadian economy," said Michael Goshko, corporate risk manager at Western Union Business Solutions. Canada is a major exporter of commodities, including oil, so its economy could benefit from reduced trade uncertainty. U.S. crude oil futures settled 0.9% lower at $53.31 a barrel. The expectation that the Federal Reserve will later this month lower its benchmark interest rate below the level of the Bank of Canada's policy rate has added to support for the loonie, Goshko said. On Oct. 30, investors expect the Fed to cut its overnight lending rate by a quarter of a percentage point to a range of 1.50% to 1.75%. The same day, the Bank of Canada is seen leaving its target for the overnight rate at 1.75%. At 3:49 p.m. (1949 GMT), the Canadian dollar was trading 0.3% higher at 1.3082 to the greenback, or 76.44 U.S. cents, its strongest level since July 22. The gain for the loonie came as Canadians voted to determine whether Prime Minister Justin Trudeau will remain in power after two major scandals. Trudeau's Liberals and the main opposition Conservatives are in a neck-and-neck race, according to opinion polls. "After some noise around the vote, we think FX players will refocus attention on the Bank of Canada policy outlook, the Fed and international backdrop pretty quickly," Shaun Osborne, chief market strategist, at Scotiabank said in a note. The Bank of Canada will release on Tuesday the autumn issue of the Business Outlook Survey, which could help guide expectations for its policy outlook. Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries, with the 10-year falling 15 Canadian cents to yield 1.561%. Last Thursday, the 10-year yield reached a three-month high at 1.608%. (Additional reporting by Saqib Iqbal Ahmed; editing by Grant McCool and Cynthia Osterman)

CANADA FX DEBT-Loonie posts 11-week high as investors weigh election uncertainty

18 Oct 2019

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar rises 0.1% against the greenback * Loonie ends the week up 0.6% * Bullish bets on the loonie increase to a 4-week high * Canadian bond prices rise across a flatter yield curve By Fergal Smith TORONTO, Oct 18 The Canadian dollar climbed to its strongest in more than two months against a broadly weaker U.S. counterpart on Friday but gains for the currency were tempered by an uncertain outlook for Canada's federal election on Monday. Polls show Prime Minister Justin Trudeau's Liberals are locked in a tie with the opposition Conservatives and will not capture enough seats for a majority. That could leave them in a weakened position, reliant on smaller parties to govern. "I think there is probably some squaring up ahead of that event (the vote)," said Mark McCormick, North American head of FX strategy at TD Securities. "It could go in two directions, which could be currency moving." A Conservative majority could be positive for the currency, while a Liberal minority government that relies on the support of the New Democratic Party (NDP) could be negative, McCormick said. The left-leaning NDP has said it is opposed to the expansion of a flagship oil pipeline, Trans Mountain. At 4:23 p.m. (2023 GMT), the Canadian dollar was trading 0.1% higher at 1.3124 to the greenback, or 76.20 U.S. cents. The currency touched its strongest intraday level since July 31 at 1.3119. For the week, the loonie was up 0.6% after Britain reached a deal to avoid a disorderly divorce from the European Union that could have hurt the global economy. Canada runs a current account deficit and is a major exporter of commodities, including oil, so its economy could benefit from a pick-up in global growth. U.S. crude oil futures settled 0.3% lower, pressured by concerns about China's economy. Speculators have raised their bullish bets on the Canadian dollar to the highest since mid-September, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed. As of Oct. 15, net long positions had increased to 12,961 contracts from 5,313 in the prior week. The Teranet-National Bank Composite House Price Index rose 0.1% in September from August. After correcting for seasonal pressure, the index was higher for the second straight month. The Bank of Canada, which will make its next interest rate decision on Oct. 30, has said that housing activity has recovered more quickly than expected, helped by lower mortgage rates. Canadian government bond prices were higher across a flatter yield curve, with the 10-year rising 13 Canadian cents to yield 1.546%. On Thursday, the 10-year yield reached a three-month high intraday at 1.608%. (Reporting by Fergal Smith Editing by Chizu Nomiyama and Alistair Bell)

CANADA FX DEBT-Loonie notches 11-week high as 'risk-on' boosts commodity currencies

17 Oct 2019

(Adds strategist quotes and details on activity; updates prices) * Canadian dollar rises 0.4% against the greenback * Loonie touches its strongest since July 31 at 1.3131 * Canadian manufacturing sales increase by 0.8% in August * Canada's 10-year yield posts a three-month high at 1.608% By Fergal Smith TORONTO, Oct 17 The Canadian dollar climbed to its strongest in more than two months against its U.S. counterpart on Thursday as investors welcomed an eleventh-hour Brexit deal and domestic data showed a stronger-than-expected gain for factory sales in August. Global stocks rose after Britain reached a deal to avoid a disorderly divorce from the European Union that could have hurt the global economy. "You can put most of it (the Canadian dollar rally) down to the general risk-on sentiment that we've seen benefit commodity currencies," said Mark Chandler, head of Canadian fixed income and currency strategy at RBC Capital Markets. Canada, like Australia and New Zealand, is a major commodities exporter, so its economy could benefit from an improved global growth outlook. Canadian manufacturing sales increased by 0.8% in August from July on higher motor vehicle sales, as well as fabricated metal products, data from Statistics Canada showed. Analysts had forecast a 0.6% increase. "You can make the case that the global weakness that we've seen has been slow to seep into both non-energy exports and manufacturing sales in Canada," Chandler said. The Bank of Canada has left its benchmark interest rate on hold this year at 1.75% even as some of its global peers, including the Federal Reserve and the European Central Bank, have eased. Its next rate decision is on Oct. 30. Separate data from payroll services provider ADP showed that Canada added 28,200 jobs in September, building on a blockbuster increase of 109,900 in an upwardly revised reading for the previous month. At 3:54 p.m. (1954 GMT), the Canadian dollar was trading 0.4% higher at 1.3142 to the greenback, or 76.09 U.S. cents. The currency reached its strongest intraday level since July 31 at 1.3131. The gain for the loonie came as U.S. House Speaker Nancy Pelosi said lawmakers were getting closer to an agreement with the Trump administration on revisions to the deal negotiated by the Trump administration with Canada and Mexico. Canada sends about 75% of its exports to the United States, including oil. U.S. crude oil futures settled 1.1% higher at $53.93 a barrel despite a larger-than-expected rise in U.S. crude stockpiles. Canadian government bond prices were lower across the yield curve, with the two-year down 2.8 Canadian cents to yield 1.659% and the 10-year falling 18 Canadian cents to yield 1.567%. The 10-year yield touched its highest intraday level since July 16 at 1.608%. (Reporting by Fergal Smith Editing by Chizu Nomiyama and Richard Chang)

CANADA FX DEBT-Canadian dollar recovers as investors bet on Brexit deal

16 Oct 2019

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar near flat against the greenback * Canadian inflation holds steady at 1.9% in September * Price of U.S. oil increases 1% * Canadian bond prices rise across a steeper yield curve By Fergal Smith TORONTO, Oct 16 The Canadian dollar was little changed against its U.S. counterpart on Wednesday, clawing back its earlier decline as the potential for a last-minute Brexit deal weighed on the greenback. The U.S. dollar fell across the board as dismal U.S. retail sales data painted a gloomy picture of the economy and as sterling and the euro benefited from hopes that Britain and the European Union were on the verge of an amicable divorce deal. "It seems like we are getting closer and closer to a deal between the EU and the U.K.," said Bipan Rai, North America head, FX strategy, at CIBC Capital Markets. "You are seeing some of that positioning off-loaded across the board and that has put the (U.S.) dollar on the defensive, and several currencies have gained as a result." Canada is a major exporter of commodities, including oil, so its economy could benefit from reduced global trade uncertainty. Oil prices were supported by signs that OPEC and allied producers will continue to curb supplies in December. U.S. crude oil futures settled 1% higher at $53.36 a barrel. At 5 p.m. (2100 GMT), the Canadian dollar was trading nearly unchanged at 1.3197 to the greenback, or 75.77 U.S. cents. The currency, which notched a one-month high on Friday at 1.3171 after data showing a second straight month of blockbuster Canadian job gains, traded in a range of 1.3184 to 1.3243. Canada's annual inflation rate held steady at 1.9% in September, falling short of the 2.1% rate that analysts had expected, data on Wednesday from Statistics Canada showed. Still, the average of the Bank of Canada's three core measures edged up to 2.1% from 2.0%, cementing expectations for the central bank to leave its benchmark interest rate on hold at 1.75% later this month. Canadian government bond prices were higher across a steeper yield curve, with the two-year up 4 Canadian cents to yield 1.668% and the 10-year rising 14 Canadian cents to yield 1.548%. On Tuesday, the 10-year yield touched its highest level intraday in nearly one month at 1.577%. (Reporting by Fergal Smith; Editing by Steve Orlofsky and Alistair Bell)

CANADA FX DEBT-Loonie gets tailwind from rising Brexit deal hopes

15 Oct 2019

(New throughout, updates prices, market activity and adds dealer comments) * Canadian dollar rises 0.3% against the greenback * IMF leaves its Canadian 2019 growth forecast unchanged at 1.5% * Price of U.S. oil decreases 1.5% * Canada's 10-year yield touches a four-week high at 1.577% By Fergal Smith TORONTO, Oct 15 The Canadian dollar strengthened against its U.S. counterpart on Tuesday, with investors encouraged by signs of progress between Britain and the European Union to reach an amicable divorce deal. Stocks in Europe and on Wall Street jumped on strong U.S. corporate results and a possible deal to avoid a disorderly Brexit. On Friday, U.S. President Donald Trump said China and the United States had reached the first phase of a trade deal, which was also supportive of stocks. Canada is a major exporter of commodities, including oil, and runs a current account deficit, so its economy could benefit from a pick-up in the global flow of trade or capital. "This move today I would say is the loonie benefiting from positive global tailwinds," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets. "There is a chance we see some more CAD appreciation pending tomorrow's inflation data out of Canada." Canada's inflation report for September, due on Wednesday, could help guide expectations for the Bank of Canada policy outlook. The central bank, which has left interest rates on hold this year even as some of its major peers have eased, is due to make its next rate decision on Oct. 30. At 4:23 p.m. (2023 GMT), the Canadian dollar was trading 0.3% higher at 1.3200 to the greenback, or 75.76 U.S. cents. The currency, which last Friday notched a one-month high at 1.3171 after data showing a much bigger-than-expected domestic jobs gain, traded in a range of 1.3196 to 1.3238. Oil prices fell as investors worried that the unrelenting U.S.-China trade war would keep squeezing the global economy, and that swelling U.S. crude inventories would further pressure prices. U.S. crude oil futures settled 1.5% lower at $52.81 a barrel. The International Monetary Fund cut its global growth forecast for 2019 to 3%, its lowest level since the global financial crisis, but its projection for Canada was unchanged from its previous forecast in July at 1.5%. Canadian government bond prices were lower across the yield curve, with the two-year down 7 Canadian cents to yield 1.693% and the 10-year falling 40 Canadian cents to yield 1.562%. The 10-year yield touched its highest intraday level since July 17 at 1.577%. (Reporting by Fergal Smith; Editing by David Gregorio)

RPT-Fix economic growth, Canada's frustrated businesses urge ahead of vote

15 Oct 2019

OTTAWA/TORONTO, Oct 15 Canada's political leaders should address the underlying problems limiting long-term economic growth and not just campaign on pocketbook issues ahead of the federal election this month, business leaders, economists and foreign investors say.

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