Wednesday July 30, 2008 - 22:53:30 GMT
Share This Story
Reuters - www.reuters.com
Forex Market News - Canadian dollar ekes out gain on oil surge
By John McCrank
TORONTO (Reuters) - The Canadian dollar eked out a gain
against the U.S. dollar on Wednesday, ending a six-session
slide, as higher oil prices lent the commodity-based currency
Canadian bond prices were mostly lower as solid North
American stock market performances cut into the safe-haven
attraction of government debt.
The Canadian dollar closed at C$1.0228 to the U.S. dollar,
or 97.77 U.S. cents, up from C$1.0238 to the U.S. dollar, or
97.68 U.S. cents, at Tuesday's close.
The currency had fallen to low of C$1.0271 to the U.S.
dollar during the session after the greenback strengthened on
the back of some higher than expected private-sector jobs data.
But the Canadian dollar was given a boost after the price
of U.S. crude oil jumped more than $4 a barrel on figures that
showed a surprise drawdown in U.S. gasoline stocks.
Canada is the biggest supplier of oil to the United States
and much of the Canadian dollar's 60 percent run-up between
2002 and late 2007 was linked to higher oil prices.
Moves in the Canadian dollar that are driven by
fluctuations in the price of oil are still common, but the
longer-term influence of oil has waned considerably since oil
prices skyrocketed in recent months.
"Part of that has to do with the notion that the latest
price action in the oil market is at least partly, if not
largely, driven by speculation, and therefore not reflective of
an underlying sustainable trend," said Matthew Strauss, senior
currency strategist at BC Capital Markets.
"Consequently, the petro-currencies are not reacting to oil
price moves as one might expect."
He said that if oil were to fall back to around the $100 a
barrel mark, and if it was clearly fundamentals driving the
price action, the relationship would likely strengthen again.
On the data front, reports showed that Canadian producer
prices rose by 1.3 percent in June from May, while the price of
raw materials increased by 4.4 percent from May. Neither report
was a market mover.
Looking forward, the focus of the foreign exchange market
will be on Canadian gross domestic product data for May, and
U.S. GDP data for the second quarter, both on Thursday.
Friday will be an even bigger day for U.S. data, with a
nonfarm payroll report, vehicle sales and an Institute of
Supply Management report, all for July.
BOND PRICES MOSTLY LOWER
Canadian bond prices were mostly lower in light trade due
to higher North American equities markets and the solid
private-sector jobs report in the United States, which took the
steam out of the recent safe-haven bid for government debt.
Thursday's GDP reports in both Canada and the United States
have the potential to liven up the action in the bond market,
said Levante Mady, fixed income strategist at MF Global Canada
Co. in Vancouver.
"If we get a surprise on either front, we could see some
rocking and rolling, but... I think the bigger market mover is
going to be the employment report on Friday morning in the
The two-year bond fell 2 Canadian cents to C$101.21 to
yield 3.063 percent. The 10-year bond dropped 33 Canadian cents
to C$103.47 to yield 3.822 percent.
The yield spread between the two-year and 10-year bond was
75.3 basis points, up from 73.1 basis points.
The 30-year bond dropped 61 Canadian cents to C$113.84 for
a yield of 4.170 percent. In the United States, the 30-year
treasury yielded 4.648 percent.
The three-month when-issued T-bill yielded 2.46 percent,
unchanged from the previous close.
(Editing by Peter Galloway)
Forex Trading News
Daily Forex Market News
Forex news reports can be found on the forex research
headlines page below. Here you will find real-time forex market news reports
provided by respected contributors of currency trading information. Daily forex
market news, weekly forex research and monthly forex news features can be found
Real-time forex market news reports and features providing
other currency trading information can be accessed by clicking on any of the
headlines below. At the top of the forex blog page you will find the latest
forex trading information. Scroll down the page if you are looking for less
recent currency trading information. Scroll to the bottom of fx blog headlines
and click on the link for past reports on forex. Currency world news reports
from previous years can be found on the left sidebar under "FX Archives."