Wednesday December 10, 2008 - 22:37:23 GMT
Share This Story
Reuters - www.reuters.com
Forex Market News - CANADA FX DEBT-Canadian dollar inches up, bonds mixed
* Canadian dollar higher on auto aid hopes, oil
* Bonds mixed, longer term trend for yields to fall remain
TORONTO, Dec 10 (Reuters) - The Canadian dollar edged
higher against a generally weakening U.S. dollar on Wednesday,
supported by hopes for a rescue plan for ailing U.S. automakers
and by higher oil prices.
Bond prices were higher on the short end as investors
stepped back into stocks.
The Canadian dollar finished the largely rangebound North
American session at C$1.2596 to the U.S. dollar, or 79.39 U.S.
cents, up from C$1.2646 to the U.S. dollar, or 79.08 U.S.
cents, at Tuesday's close.
There was little homegrown news to drive the Canadian
currency, and it was unable to revisit the 80 U.S. cent level
from overnight as it moved in a range of C$1.2554 to C$1.2646
during the North American session.
But risk tolerance in the currency market was boosted by
hopes that U.S. lawmakers would finalize an agreement to save
the Big Three automakers and it pushed the U.S. dollar to a
two-week low against the euro.
"It looks like U.S. dollar weakness is the main
contributor. You can make the case that the Canadian dollar
really hasn't kept pace with some of the others out there like
the euro and pound," said Eric Lascelles, chief economics and
rates strategist at TD Securities.
"Canada isn't really a notable outlier today."
The hopes that the auto plan could be finalized helped
boost global stock markets and the positive sentiment filtered
through to commodity markets.
Lascelles noted the price of oil was supportive. Oil
bounced to nearly $44 a barrel after Tuesday's slump,
[ID:nSIN422139] and the recovery lent support to the Canadian
dollar, which has tracked the price of oil in the past few
years because of Canada's status as a major oil exporter.
Looking ahead, the currency may find more direction from
the October trade reports from the U.S. and Canada. Analysts
surveyed by Reuters expect Canada's trade balance for October
to be C$3.45 billion.
Canadian bond prices were mixed with the short and long
ends higher, and the belly of the curve under some pressure.
"It's just one of these haphazard days that doesn't have a
whole lot of clear trend to it," said Lascelles.
Longer term, the trend is for bond prices to continue to
rise as the threat of global recession weighs and central banks
are expected to keep cutting rates.
The two-year bond rose 3 Canadian cents to C$102.36 to
yield 1.529 percent. The 10-year bond declined 10 Canadian
cents to C$109.45 to yield 3.090 percent.
The yield spread between the two- and 10-year bond was at
156 basis points, up from 155 basis points at the previous
The 30-year bond rose 5 Canadian cents to C$121.85 to yield
3.748 percent. In the United States, the 30-year treasury
yielded 3.087 percent.
(Reporting by Ka Yan Ng; editing by Rob Wilson)
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."