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Fergal Smith

CANADA FX DEBT-C$ rallies as business optimism backs further rate hikes

15 Oct 2018

(Updates prices) * Canadian dollar rises 0.2 percent against greenback * Loonie touches its strongest since Oct. 10 at 1.2955 * Bank of Canada survey shows business optimism near record levels * Resales of Canadian homes dip 0.4 percent in September By Fergal Smith TORONTO, Oct 15 The Canadian dollar strengthened to its highest in five days against its U.S. counterpart on Monday, after a quarterly business survey by the Bank of Canada supported bets for another interest rate hike from the central bank as soon as next week. Canadian business optimism remained at near-record levels in the third quarter as companies reported rising pressure on capacity, labor and prices amid signs of stronger sales, the Bank of Canada said. The central bank has hiked interest rates four times since July 2017 to leave its policy rate at 1.50 percent. Chances of another hike at the Oct. 24 announcement stayed at nearly 90 percent after the data, the overnight index swaps market indicated. "It supports the outlook for higher rates in Canada and particularly toward the end of this month," said Shaun Osborne, chief currency strategist at Scotiabank. "The fact that we got such a positive read, particularly on business investment, before there was clarity on the trade outlook, I think was quite encouraging." All the interviews were carried out before Canada and the United States struck a deal on Sept. 30 on a new trade pact with Mexico. At 3:18 p.m. (1918 GMT), the Canadian dollar was trading 0.2 percent higher at 1.2990 to the greenback, or 76.98 U.S. cents. The currency touched its strongest level since Oct. 10 at 1.2955. Last week, the loonie declined 0.6 percent as worries over higher bond yields and the impact of trade tariffs contributed to volatility in global financial markets. Still, speculators have cut bearish bets on the Canadian dollar to the lowest since March, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Oct. 9, net short positions had decreased to 12,145 contracts from 18,484 a week earlier. The price of oil, one of Canada's major exports, was supported by geopolitical tension over the disappearance of a Saudi journalist that has stoked worries about supplies from the world's top crude exporter. U.S. crude oil futures settled 0.6 percent higher at $71.78 a barrel. Resales of Canadian homes dipped 0.4 percent in September from August, the first decline since April, the Canadian Real Estate Association said. Canadian government bond prices were lower across a flatter yield curve, with the 10-year falling 5 Canadian cents to yield 2.506 percent. (Reporting by Fergal Smith; Editing by Susan Thomas and Peter Cooney)

CANADA FX DEBT-C$ rallies as business optimism backs further rate hikes

15 Oct 2018

(Adds strategist quotes, details on activity; updates prices) * Canadian dollar rises 0.4 percent against the greenback * Loonie touches its strongest since Oct. 10 at 1.2955 * Bank of Canada survey shows business optimism near record-levels * Resales of Canadian homes dip 0.4 percent in September By Fergal Smith TORONTO, Oct 15 The Canadian dollar strengthened to its highest in five days against its U.S. counterpart on Monday, after a quarterly business survey by the Bank of Canada supported bets for another interest rate hike from the central bank as soon as next week. Canadian business optimism remained at near-record levels in the third quarter as companies reported rising pressure on capacity, labor and prices amid signs of stronger sales, the Bank of Canada said. The central bank has hiked interest rates four times since July 2017 to leave its policy rate at 1.50 percent. Chances of another hike at the Oct. 24 announcement stayed at nearly 90 percent after the data, the overnight index swaps market indicated. "It supports the outlook for higher rates in Canada and particularly toward the end of this month," said Shaun Osborne, chief currency strategist at Scotiabank. "The fact that we got such a positive read, particularly on business investment, before there was clarity on the trade outlook, I think was quite encouraging." All the interviews were carried out before Canada and the United States struck a deal on Sept. 30 on a new trade pact with Mexico. At 11:55 a.m. (1555 GMT), the Canadian dollar was trading 0.4 percent higher at 1.2968 to the greenback, or 77.11 U.S. cents. The currency touched its strongest since Oct. 10 at 1.2955. Last week, the loonie declined 0.6 percent as worries over higher bond yields and the impact of trade tariffs contributed to volatility in global financial markets. Still, speculators have cut bearish bets on the Canadian dollar to the lowest since March, data from the U.S. Commodity Futures Trading Commission and Reuters calculations showed on Friday. As of Oct. 9, net short positions had decreased to 12,145 contracts from 18,484 a week earlier. U.S. crude prices were down 0.1 percent at $71.28 a barrel. The disappearance of a prominent Saudi journalist has raised tensions between the United States, the world's top oil consumer, and Riyadh, one of the biggest oil producers. That was offset by the long-term demand outlook. Oil is one of Canada's largest exports. Resales of Canadian homes dipped 0.4 percent in September from August, the first decline since April, the Canadian Real Estate Association said. Canadian government bond prices were lower across a flatter yield curve, with the 10-year falling 6 Canadian cents to yield 2.507 percent. (Reporting by Fergal Smith Editing by Nick Zieminski and Susan Thomas)

Canadian dollar steadies as oil and stock prices rebound

12 Oct 2018

TORONTO The Canadian dollar was little changed against a broadly stronger greenback on Friday as oil and stock prices rebounded, but the loonie lost ground for the week as investors worried about threats to the global growth outlook.

CANADA FX DEBT-C$ recovers from near 2-week low on U.S. inflation miss

11 Oct 2018

TORONTO, Oct 11 The Canadian dollar rose against its U.S. counterpart on Thursday, recovering from an earlier 12-day low as data showing a slowdown in U.S. inflation weighed on the greenback.

CANADA FX DEBT-C$ turns higher as U.S. Treasury yields slip

09 Oct 2018

(Adds strategist quotes and details throughout; updates prices) * Canadian dollar strengthens 0.1 percent against the greenback * Domestic housing starts unexpectedly fell in September * Price of U.S. oil rises 0.9 percent * Canadian bond prices rise across a flatter yield curve By Fergal Smith TORONTO, Oct 9 The Canadian dollar edged higher against its U.S. counterpart on Tuesday, clawing back its losses from earlier in the session as oil prices rose and the recent move higher in U.S. Treasury yields stalled. At 3:13 p.m. (1913 GMT), the Canadian dollar was trading 0.1 percent higher at 1.2943 to the greenback, or 77.26 U.S. cents. The currency, which on Monday touched its weakest intraday in more than one week at 1.3010 to the dollar, traded in a range of 1.2936 to 1.3004. The loonie's recovery from its low for the day came as the U.S. dollar pulled back from an earlier seven-week peak against a basket of currencies. "The U.S. dollar was bid and gave up some of its gains as the day progressed," said Win Thin, global head of emerging markets strategy at Brown Brothers Harriman. "Part of it is disappointment that U.S. yields didn't go any higher." U.S. long-dated Treasury yields fell from multi-year highs in choppy trading as investors took a breather from selling bonds. Higher interest rates and the U.S.-China trade war are among factors that are diminishing prospects for economic expansion, said the International Monetary Fund as it cut its forecast for global growth in 2018 and 2019. Canada's economy could suffer if global growth slows, since it exports many commodities, including oil. U.S. crude oil futures settled 0.9 percent higher at $74.96 a barrel on growing evidence of falling Iranian crude exports before the imposition of new U.S. sanctions. The loonie declined 0.3 percent last week despite a deal to revamp the North American Free Trade Agreement and data on Friday showing a jump in domestic jobs. Canadian housing starts fell in September to a seasonally adjusted annualized rate of 188,683 units, the third straight month of decline, data on Tuesday from the Canadian Mortgage and Housing Corp showed. Economists had expected starts to rise to 210,000. Canadian government bond prices were higher across a flatter yield curve as the domestic debt market reopened following the Thanksgiving Day holiday on Monday. The 10-year climbed 23 Canadian cents to yield 2.574 percent. On Friday, the 10-year yield touched its highest intraday level since January 2014 at 2.615 percent. (Reporting by Fergal Smith; Editing by Steve Orlofsky and James Dalgleish)

CANADA FX DEBT-C$ dips as jobs gain seen not enough to accelerate rate hikes

05 Oct 2018

(New throughout, updates prices and market activity; adds economist comments) * Canadian dollar falls 0.2 percent against the greenback * Loonie touches its weakest since Sept. 28 at 1.2955 * Canada adds 63,300 jobs in September * Canada's 10-year yield nears a 5-year high at 2.615 percent By Fergal Smith TORONTO, Oct 5 The Canadian dollar slipped to a one-week low against its U.S. counterpart on Friday as data showing a jump in domestic jobs was seen as not enough to trigger a faster pace of interest rate hikes by the Bank of Canada. The Canadian economy added 63,300 jobs in September, Statistics Canada data indicated. That was more than twice as many as analysts had forecast, although all the job gains were in part-time positions. In separate data, Canada recorded its first trade surplus for more than 18 months in August as unusually timed shutdowns at auto plants helped cut imports at a greater rate than exports. "The headlines for both reports were much better than expected, but the details are less upbeat," said Ryan Brecht, a senior economist at Action Economics. Due to the weaker details, there is no additional pressure on the Bank of Canada "to drop its commitment to gradualism" at the Oct. 24 policy announcement, Brecht said. The central bank, which has raised interest rates four times since July 2017, said last month that it had discussed whether a gradual approach to tightening remained appropriate. Chances of a hike in October were little changed at about 85 percent after the data, the overnight index swaps market indicated. At 3:53 p.m. (1953 GMT), the Canadian dollar was trading 0.1 percent lower at 1.2945 to the greenback, or 77.25 U.S. cents. The currency touched its weakest since Sept. 28 at 1.2955. Still, it outperformed the New Zealand dollar, which fell 0.6 percent and the Australian dollar, which was down 0.3 percent. Declines for commodity-linked currencies came as data showing U.S. wage growth helped push yields on longer-dated U.S. bonds to multi-year peaks. For the week, the loonie was down 0.3 percent as the U.S. dollar broadly climbed. On Monday, the Canadian dollar touched its strongest in more than four months at 1.2783 after a last-minute deal to salvage the trilateral North American Free Trade Agreement reduced uncertainty for Canada's economy. U.S. crude oil futures settled 1 cent higher at $74.34 a barrel. Oil is one of Canada's major exports. Canadian government bond prices were lower across a steeper yield curve, with the 10-year falling 35 Canadian cents to yield 2.601 percent. The 10-year yield touched its highest since January 2014 at 2.615 percent. Canada's bond market will be closed on Monday for the Thanksgiving Day holiday on Monday. (Reporting by Fergal Smith Editing by Nick Zieminski and David Gregorio)

CANADA FX DEBT-C$ gives up its NAFTA gains as commodity currencies slide

04 Oct 2018

(Adds strategists quotes and details throughout; updates prices)) * Canadian dollar declines 0.5 percent against the greenback * Loonie touches its weakest since last Friday at 1.2938 * The Australian and New Zealand dollars also lose ground * Canada's 10-year yield nears a five-year high at 2.584 percent By Fergal Smith TORONTO, Oct 4 The Canadian dollar weakened against the greenback on Thursday, giving up the gains that followed a deal over the weekend to revamp the NAFTA trade pact, as lower oil and metal prices pressured the currencies of commodity producing countries. The price of oil, one of Canada's major exports, fell as the prospect of increased crude production from Saudi Arabia and Russia prompted profit-taking the day after futures hit four-year highs. U.S. crude oil futures settled 2.7 percent lower at $74.33 a barrel, while copper futures declined 1.8 percent. "It's really a commodities play," said Michael Goshko, corporate risk manager at Western Union Business Solutions. The three worst performing G10 currencies were the commodity-linked Canadian, Australian and New Zealand dollars. At 3:40 p.m. (1940 GMT), the Canadian dollar was trading 0.5 percent lower at 1.2931 to the greenback, or 77.33 U.S. cents. It touched its weakest level since last Friday at 1.2938, which was before a deal was clinched to salvage the North American Free Trade Agreement. On Monday, the loonie touched its strongest in more than four months at 1.2783. Declines for commodity-linked currencies came as U.S. Treasury yield pushed to multi-year highs ahead of U.S. jobs data on Friday that could show the American economy growing at a robust pace. Canada's jobs data is also due on Friday. Ivey Purchasing Managers Index data released on Thursday showed that purchasing activity in Canada expanded in September at its slowest pace in more than two years as a measure of employment tumbled. "We have got huge numbers tomorrow both north and south of the border," Goshko said. "So we could be looking at an entirely different picture in the morning." The Canadian dollar will rally over the coming year, according to currency strategists in a Reuters poll who raised their forecasts for the currency as the deal to salvage NAFTA reduced economic uncertainty. Canadian government bond prices were mixed across a steeper yield curve, with the two-year up 1.5 Canadian cents to yield 2.307 percent and the 10-year falling 1 Canadian cent to yield 2.553 percent. The 10-year yield touched its highest intraday since January 2014 at 2.584 percent. (Reporting by Fergal Smith; editing by Diane Craft)

Canadian dollar to rally; trade deal clips economic worry

04 Oct 2018

TORONTO The Canadian dollar will rally over the coming year, according to currency strategists in a Reuters poll who raised their forecasts for the loonie as a deal to revamp the North American Free Trade Agreement reduced economic uncertainty.

UPDATE 1-Canada's Ivey purchasing index slumps to 2-year low in September

04 Oct 2018

TORONTO, Oct 4 Purchasing activity in Canada expanded in September at its slowest pace in more than two years as a measure of employment tumbled, according to Ivey Purchasing Managers Index data released on Thursday.

Canadian dollar to rally; trade deal clips economic worry: Reuters poll

04 Oct 2018

TORONTO The Canadian dollar will rally over the coming year, according to currency strategists in a Reuters poll who raised their forecasts for the currency as a deal to revamp the North American Free Trade Agreement reduced economic uncertainty.

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