Wednesday May 20, 2009 - 22:12:52 GMT
Share This Story
Reuters - www.reuters.com
Forex Market news -
* C$ finishes higher at 87.69 U.S. cents
* Inflation data, economic outlook lend support
* Greenback retreats amid growing risk appetite
* Bonds mostly flat across the curve
(Adds details, quotes)
By Jennifer Kwan
TORONTO, May 20 (Reuters) - The Canadian dollar touched its
highest level in seven months on Wednesday, lifted by rising
oil and equity prices and as the U.S. dollar tumbled on hope
the global economy may be stabilizing, which dented the
greenback's appeal as a safe haven.
The combination of factors helped to push the Canadian
currency as high as C$1.1363 to the U.S. dollar, or 88.00 U.S.
cents, its highest level since Oct. 14.
The broader story was U.S. dollar weakness, said J.P.
Blais, vice-president, FX Products, BMO Capital Markets
"Everyone is trying to sell as many U.S. dollars as
possible," said Blais. "It's a little bit more of a
continuation of looking into riskier trades and for better
The greenback fell to its lowest level in nearly five
months against major currencies on optimism the worst of the
global economic downturn may be over. [FRX/]
The Canadian dollar also got a boost as domestic inflation
data was seen making it less likely that the Bank of Canada
will resort to unconventional measures, or quantitative easing,
to stimulate the economy.
The annual inflation rate in April dropped to a 14-year low
of 0.4 percent from 1.2 percent in March due to lower energy
prices, Statistics Canada said.
The core inflation rate fell to 1.8 percent from 2.0 percent
in March and was in line with expectations. [ID:nN20487391]
"The inflation backdrop the Bank of Canada sees, confirmed
by this data, is that it does not see a significant deflation
risk developing in the Canadian economy so the threat of
quantitative easing, is easing," said David Watt, senior
currency strategist RBC Capital Markets.
The Canadian dollar <CAD=D3> finished at C$1.1404, or 87.69
U.S. cents, up from C$1.1563 to the U.S. dollar, or 86.48 U.S.
cents, on Tuesday.
Also supporting the currency were firmer oil prices, which
settled above $62 a barrel, as U.S. data showed a steep drop in
inventories ahead of the summer driving season.
The Canadian currency rose in tandem with Toronto equities,
which climbed 2.6 percent to touch a 2009 high as rising oil
and gold prices lifted the resource-laden market.
BOND PRICES FLAT
Bond prices were mostly flat as the market largely ignored
the inflation data, said Sheldon Dong, fixed income analyst at
TD Waterhouse Private Investment, noting the economic reading
"The Canadian bond market is very disinterested today," he
The benchmark two-year government bond was down 1
Canadian cent at C$100.29 to yield 1.107 percent, while the
10-year bond was unchanged at C$105.20 to yield 3.142 percent.
The 30-year bond fell 10 Canadian cents to C$118.60 to
yield 3.903 percent. The U.S. 30-year yield was 4.1456.
Canadian bond performance was mixed compared with their
U.S. counterparts across the curve. The 30-year bond yield was
about 24 basis points below the U.S. 30-year yield, compared to
about 19 basis points on Tuesday.
(Reporting by Jennifer Kwan; 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."