Wednesday November 5, 2008 - 21:42:44 GMT
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Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-C$ follows oil prices to lower close
* Canadian dollar's six-session win streak snapped
* Lower oil prices blamed for currency's slide
* Bonds end higher ahead of Friday's jobs data
By Frank Pingue
TORONTO, Nov 5 (Reuters) - The Canadian dollar closed lower
versus the U.S. dollar on Wednesday, ending a six-session win
streak, as lower oil prices weighed on the commodity-sensitive
currency ahead of the release of key jobs data later this
Canadian bond prices ended higher across the curve, rising
with U.S Treasuries on weak U.S. economic data.
The Canadian dollar closed at C$1.1680 to the U.S. dollar,
or 85.62 U.S. cents, down from C$1.1511 to the U.S. dollar, or
86.87 U.S. cents, at Tuesday's close.
A 7 percent drop in the price of oil, a key Canadian
export whose price often dictates the currency's direction, was
blamed for the currency's fall.
Another drag on the Canadian dollar was a U.S. report that
showed private employers made their deepest job cuts in six
years last month and companies' planned layoffs rose to their
highest level in nearly five years.
Canadian October jobs data is due out on Friday. After an
unexpected surge of 106,900 new jobs in September, analysts
surveyed by Reuters expect a decline of 10,000 in October, and
for the unemployment rate to rise to 6.2 percent from 6.1
"You got to expect that there is going to be some job
losses in Canada as well," said David Bradley, director of
foreign exchange trading at Scotia Capital. "So perhaps there
could be a little more negativity for the Canadian dollar
around the corner before the end of the week."
Another drag on the Canadian dollar was nagging fears of a
global recession, which lessened investor interest in riskier
assets and resulted in them snapping up greenbacks.
BONDS PINNED LOWER
Canadian bond prices all ended slightly higher across the
curve as dealers took their cue from the bigger U.S. Treasuries
market, which rallied after the employment report.
Gains were limited by sentiment that equity markets are on
the way up despite Wednesday's stock losses.
"Data has been poor and equity markets, up until today,
have been pretty happy. So the two are largely offsetting,"
said Mark Chandler, fixed income strategist at Royal Bank of
Canada. "As well, people are looking ahead to what should be
weak news with the labor reports."
Dealers were also awaiting the next batch of Canadian data.
September's building permits and the Ivey Purchasing Managers
Index for October are both set to be released on Thursday.
The two-year bond rose 1 Canadian cent to C$101.57 to yield
1.970 percent. The 10-year bond increased 10 Canadian cents to
C$104.05 to yield 3.741 percent.
The yield spread between the two- and 10-year bond was 178
basis points, from 185 basis points at the previous close.
The 30-year bond ended up 30 Canadian cents at C$112.70 to
yield 4.229 percent. In the United States, the 30-year Treasury
yielded 4.136 percent.
(Editing by Peter Galloway
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