✂ Fed’s first rate cut since 2020: Use our free Stock Screener to find new opportunities fastExplore for FREE

CANADA FX DEBT-C$ higher as oil climbs, U.S. dollar weakens

Published 06/09/2009, 04:40 PM
Updated 06/09/2009, 05:09 PM

* C$ finishes at 90.65 U.S. cents

* Bonds mixed; long-dated U.S. Treasuries fall (Adds details, quote)

By Jennifer Kwan

TORONTO, June 9 (Reuters) - The Canadian dollar rose against the U.S. dollar on Tuesday, underpinned by weakness in the greenback and by strength in oil prices due to a U.S. report that revised global oil demand forecasts higher.

With no economic data to speak of, those two factors were the main drivers behind the Canadian currency's buoyancy, said Tyson Wright, senior foreign exchange trader, Custom House.

"With oil up near $70 and the U.S. dollar selling off across the board, the Canadian dollar's gotten wrapped up in that risk sentiment and has benefited from that," he said.

The currency extended its gains from the previous session, climbing as high as C$1.0982 to the U.S. dollar, or 91.06 U.S. cents, but retreated slightly to finish the session up at C$1.1032 to the U.S. dollar, or 90.65 U.S. cents.

On Monday, the currency closed at C$1.1168 to the U.S. dollar, or 89.54 U.S. cents.

Oil , a key Canadian export, shot up nearly 3 percent to settle at a seven-month high of $70 a barrel on Tuesday, boosted by the weak greenback and a U.S. government report revising global demand expectations higher amid signs the economy may be improving. [ID:nSP387179]

The U.S. dollar fell broadly after showing recent strength against some major currencies due to speculation the U.S. Federal Reserve may raise rates sooner than expected following better than expected U.S. jobs figures last week. [FRX/]

"Traders are paring back expectations that there'll be a Fed hike in the near term. That's positive for the Canadian dollar," Wright said.

BONDS MIXED

Canadian bond prices were mixed, with the short end flat to slightly higher and the long end lower along with the U.S. Treasuries market, where long-dated Treasuries fell on supply concerns with auctions looming later in the week. [ID:nN09385899]

The bond market was also adjusting following higher yields after the U.S. jobs data, said Levente Mady, market strategist at Union Securities.

"I think today the market is catching its breath," he said.

The benchmark two-year government bond ticked 8 Canadian cents higher to C$99.79 to yield 1.358 percent, while the 10-year bond fell 10 Canadian cents to C$101.77 to yield 3.538 percent.

The 30-year bond dropped 45 Canadian cents to C$116.10 to yield 4.035 percent. The comparable U.S. Treasury issue yielded 4.6626 percent.

Canadian bonds mostly underperformed U.S. Treasuries across the curve. The Canadian 30-year bond was 62.8 basis points below the U.S. 30-year yield, compared with about 63 basis points below on Monday. (Reporting by Jennifer Kwan; editing by Peter Galloway)

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.