Friday May 16, 2008 - 21:07:42 GMT
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Reuters - www.reuters.com
Forex Market News - Canadian dollar nearly flat ahead of long weekend
* Canadian dollar closes flat, but up on week
* Lofty oil prices lend support to Canadian dollar
* Bond prices lower across the curve
By John McCrank
TORONTO, May 16 (Reuters) - The Canadian dollar was flat
against the U.S. dollar on Friday in quiet trade ahead of
Canada's Victoria Day long weekend, but it did record its
second straight weekly gain as the commodity-linked currency
drew support from robust oil prices.
Canadian bond prices, with no key economic data to
consider, drifted lower along with the U.S. market.
The Canadian currency closed at US$1.0002, valuing a U.S.
dollar at 99.98 Canadian cents, up a bit from US$1.0000 at
The currency rose 0.6 percent this week after a gain of 1.4
percent last week.
Early in the session, the Canadian dollar rose to US$1.0049
as U.S. crude oil CLc1 touched a record high near $128 a
barrel. See [ID:nN16574659]. But the currency fell back to
parity as oil prices eased.
Canada is a major oil producer and exporter and its
currency often follows prices for the commodity, a trend that
started to regain momentum in recent weeks.
While the Canadian dollar was pretty much unchanged versus
the greenback, it fell against most other major currencies, in
tandem with the U.S. dollar, said Camilla Sutton, currency
strategist at Scotia Capital.
That was due to weak U.S. consumer confidence data, which
raised some concerns about U.S. second-quarter economic growth.
The United States is by far Canada's biggest trading partner.
Next week the slate of Canadian economic data picks up with
a slew of reports that include April inflation data on
Wednesday and March retail sales on Thursday.
"Next week the retail sales data will be more important
that the CPI, just because I think CPI will show what we all
know already, which is that inflation pressures in Canada are
really very moderate," Sutton said.
BONDS TILT LOWER
Canadian bond prices tilted lower in quiet trade as the
bond market closed early for the long weekend.
"We've got really just the mildest of selloffs," said Eric
Lascelles, chief economics and rates specialist at TD
"But we do have some pretty big numbers next week and I
suppose there will be some room for Canadian bonds to rally."
The two-year bond was down 6 Canadian cents at C$101.87 to
yield 2.798 percent. The 10-year fell 13 Canadian cents to
C$103.25 to yield 3.575 percent.
The yield spread between the two- and 10-year bonds was
77.7 basis points, down from 78.6 at the previous close.
The 30-year bond dropped 1 Canadian cent to C$116.29 for a
yield of 4.041 percent. In the United States, the 30-year
Treasury yielded 4.577 percent.
The three-month when-issued T-bill yielded 2.61 percent,
down from 2.63 percent at the previous close.
(Editing by Peter Galloway)
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