Forex Market News - Canadian dollar has biggest weekly drop in decades
Fri Oct 3, 2008 4:46pm EDT
* Canada's dollar ends week 4.5 pct lower versus greenback
* U.S. House passes $700 bln financial bailout package
* Bonds rise on concerns of global recession
By John McCrank
TORONTO, Oct 3 (Reuters) - The Canadian dollar suffered its biggest weekly decline in at least 38 years against the U.S. dollar this week as the passage by Congress of the $700 billion U.S. rescue package on Friday failed to persuade investors that the worst of the financial crisis was behind them.
Bond prices rose and yields fell as fears of a global recession had many in the market betting that central banks would soon be cutting interest rates to spur growth.
The Canadian dollar closed at C$1.0815 to the U.S. dollar, or 92.46 cents, down from C$1.0799 to the U.S. dollar, or 92.60 U.S. cents, at Thursday's close.
The currency ended the week down 4.5 percent against the greenback, its biggest one-week drop since at least 1970, according to Thomson Reuters data. Early in the session it touched a 13-month low, but regained some ground after the passage of the rescue package for the besieged U.S. financial sector. See [ID:nSP58422]
The U.S. House of Representatives passed a revised version of the bailout plan after its surprise rejection of the first version of the plan earlier this week, which sent markets into panic mode.
As financial institutions in the United States and Europe have collapsed in response to bursting real estate bubbles and murky assets, lenders have responded by hoarding cash and U.S. dollars have become scarce, driving up the premium on them.
"You almost can't look at a currency's performance against the U.S. dollar because there is this underlying structural demand for dollars because of this financial crisis that is spreading around the world," said David Watt, senior currency strategist at RBC Capital Markets.
Once the U.S. economic rescue package was passed, traders focused their attention back on world economies.
"We're getting economic numbers in the U.S. which are dismal, and that, I think, removes any debate about whether there will be a recession in the U.S.... and there's a significant risk of a global recession," Watt said.
U.S. jobs data highlighted the impact of the economic downturn, with the steepest job losses in 5-1/2 years in September as employers cut 159,000 nonfarm jobs from their payrolls. Analysts had expected a loss of 100,000 jobs.
The United States is by far Canada's biggest trading partner.
Weakening commodity prices have also weighed heavily on Canada's dollar, with around half of Canadian exports made up of natural resources.
"Commodity price measures are not just back to levels of a year ago, but all the way back to levels prevailing in late 2005, and the selloff is taking no prisoners," said Doug Porter, deputy chief economist at BMO Capital Markets. "
"A darkening global growth outlook and a rejuvenated U.S. dollar -- which had its best week in years -- have both pounded on resource prices."
BOND PRICES RALLY
Canadian bond prices rose as investors, with the U.S. bailout package passed, turned their attention back to the U.S. economy.
"The realization that the U.S. economy is in recession is beginning to settle in... package or no package, the recession is here," said Carlos Leitao, chief economist at Laurentian Bank of Canada.
He said the market expects central banks, the U.S. Federal Reserve and the Bank of Canada included, will start cutting rates in the near term to try to spur growth. Bond yields, which move inversely to prices, fell to reflect those expectations of lower rates.
Early in the session, the Bank of Canada moved to increase confidence in the Canadian markets by upping the amount it plans to inject into markets through Purchase and Resale Agreements to C$20 billion from a previously announced $8 billion to improve liquidity in the financial system.
The two-year bond rose 20 Canadian cents to C$100.52 to yield 2.500 percent. The 10-year bond gained 50 Canadian cents to C$105.40 to yield 3.582 percent.
The yield spread between the two-year and the 10-year bond rose to 115 basis points, from 105 basis points at the previous close.
The 30-year bond added 85 Canadian cents to C$115.15 for a yield of 4.095 percent. In the United States, the 30-year Treasury yielded 4.094 percent.
The three-month when-issued T-bill yielded 1.55 percent, down from 1.65 percent at the previous close. (Reporting by John McCrank; Editing by Peter Galloway)
Thomson Reuters journalists are subject to an Editorial Handbook which requires fair presentation and disclosure of relevant interests.
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
Forex News 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."
Actionable trading levels delivered to YOUR charts in real-time.
Tue 19 June 2018 A 12:30 US- House Permits/Starts Wed 20 June 2018 A 14:00 US- Existing Homes Sales A 14:30 US- EIA Crude Thu 21 June 2018 AA 11:00 GB- Bank of England Decision A 12:30 US- Weekly Jobless Fri 22 June 2018 AFlash PMIs
John M. Bland, MBA co-founding Partner, Global-View.com
Global-View Affiliate Program
We are starting an affiliate program to market some of our products.
Send me an email if you would be interested or if you know someone who would like to be an affiliate. Generous commissions payout for those accepted.
Put the word "affiliate" in the email subject line.
Veteran FX Trader, Max McKegg, forecasts all the Major currencies and the Australasians; providing Daily and Medium Term Trading forecasts to subscribers, who include large Banks the world over, as well as individual traders in more than 30 different countries.
looking for your first broker or do you need of a new one? There are
more critical things to consider than you might have thought.
We were trading long before there were online brokers. Global-View
has been directly involved with the industry since its infancy. We've
seen everything and are up-to-data with recent regulatory changes.
The Global-View Forex Forum is the hub for currency trading on the web. Founded in 1996, it was the original forex forum and is still the place where forex traders around the globe come 24/7 looking for currency trading ideas, breaking forex news, fx trading rumors, fx flows and more. This is where you can find a full suite of forex trading tools, including a complete fx database, forex chart points, live currency rates, and live fx charts. In addition, there is a forex brokers directory where you can compare forex brokers. There is also a forex brokers hotline where you can ask for help choosing a forex broker that meets your individual fx trading needs. Interact on the same venue to discuss forex trading.
The forex forum is where traders come to discuss the forex market. It is one of the few places where forex traders of all levels of experience, from novice to professionals, interact on the same venue to discuss forex trading. There is also the GVI Forex, which is a private subscription service where professional and experienced currency traders meet in a private forex forum. it is like a virtual forex trading room. This is open to forex traders of all levels of experience to view but only experienced currency tradingprofessionals can post.
Currency trading charts are updated daily using the forex trading ranges posted in the Global-View forex database. You will also find technical indicators on the fx trading charts, e.g. moving averages for currencies such as the EURUSD. This is another forex trading tool provided by Global-View.com.
The forex database can be used to access high, low, close daily forex ranges for key currency pairs, such as the EURUSD, USDJPY, USDCHF, GBPUSD, USDCAD, AUD, NZD and major crosses, including EURJPY, EURGBP, EURCHF, GBPJPY, GBPCHF and CHFJPY. Data for these currency trading pairs dating back to January 1, 1999 can be downloaded to an Excel spreadsheet.
Forex chart points are in a currency trading table that includes; latest fx tradinghigh-low-close range, Bollinger Bands, Fibonacci retracement levels, daily forex pivot points support and resistance levels, average daily forex range, MACD for the different currency trading pairs. You can look on the forex forum for updates when one of the fx trading tools is updated.
Global-View also offers a full fx trading chart gallery that includes fx pairs, such as the EURUSD, commodities, stocks and bonds. In a fx trading world where markets are integrated, the chart gallery is a valuable trading tool. Look for updates on the Forex Forum when the chart gallery is updated.
Global-View.com also offers a forex blog, where articles of interest for currency trading are posted throughout the day. The forex blog articles come from outside sources, including forex brokers research as well as from the professionals at Global-View.com. This forex blog includes the Daily Forex View, Market Chatter and technical forex blog updates. In additional to its real time forex forum, there are also Member Forums available for more in depth forex trading discussions.
WARNING: FOREIGN EXCHANGE TRADING AND INVESTMENT IN DERIVATIVES
CAN BE VERY SPECULATIVE AND MAY RESULT IN LOSSES AS WELL AS PROFITS. FOREIGN
EXCHANGE AND DERIVATIVES TRADING IS NOT SUITABLE FOR MANY MEMBERS OF THE
PUBLIC AND ONLY RISK CAPITAL SHOULD BE APPLIED. THE WEBSITE DOES NOT TAKE
INTO ACCOUNT SPECIAL INVESTMENT GOALS, THE FINANCIAL SITUATION OR SPECIFIC
REQUIREMENTS OF INDIVIDUAL USERS. YOU SHOULD CAREFULLY CONSIDER YOUR FINANCIAL
SITUATION AND CONSULT YOUR FINANCIAL ADVISORS AS TO THE SUITABILITY TO YOUR
SITUATION PRIOR TO MAKING ANY INVESTMENT OR ENTERING INTO ANY TRANSACTIONS.