Monday July 16, 2007 - 22:22:28 GMT
Share This Story
Reuters - www.reuters.com
Forex News - Canada dlr hits 96 cents for first time since 1977
Canada dlr hits 96 cents for first time since 1977
Mon Jul 16, 2007 4:58PM EDT
By Frank Pingue
TORONTO, July 16 (Reuters) - The Canadian dollar stormed to
96 U.S. cents for the first time in 30 years on Monday as
higher oil prices triggered a slew of automatic buy orders.
Canadian bond prices followed the bigger U.S. treasuries
market higher as lack of any key Canadian data allowed some
buying after a steady decline in prices in recent weeks.
The Canadian dollar closed at C$1.0428 to the U.S. dollar,
or 95.89 U.S. cents, up from C$1.0485 to the U.S. dollar, or
95.37 U.S. cents, at Friday's session close.
A move in oil prices to an 11-month high sent the Canadian
dollar toward the high of C$1.0440 it hit last week, and when
that level was breached it relied on a rash of automatic buy
orders to hit a session high of C$1.0416 to the U.S. dollar, or
96.01 U.S. cents. It was the first time the Canadian dollar had
been at 96 U.S. cents since March 1977.
"It's been one-way traffic," said Steve Butler, director of
foreign exchange trading at Scotia Capital. "I think it's going
to be a little bit sticky here, but certainly I think (the
Canadian dollar's) got some more room to appreciate."
The Canadian currency has turned a combination of upbeat
data, merger-related interest, higher commodity prices, a weak
U.S. dollar and expectations of higher interest rates into a 12
percent rally since it touched a 15-month low in February.
Its sharp rally has prompted several predictions that it
would reach parity with the greenback, a level last seen in
November 1976, and even convinced the Bank of Canada to suggest
last week that it may be content with just one more rate hike
to cool the red-hot Canadian economy.
The bulk of the good news may already be priced into the
currency and explain its massive charge, but the slew of M&A
deals that will require foreign buyers to load up on Canadian
dollars could give it the push it needs to reach parity.
"Maybe the the good news is priced in but the actual
financial flows that would be incorporated in the acquisitions
... have really, in my opinion, yet to be done," said Jack
Spitz, director of foreign exchange trading at National Bank
"If that's that case then you've got the fiscal flow of
U.S. dollars into Canadian dollars, which is going to lead the
(Canadian dollar) down toward parity if not beyond."
Spitz, who said he cannot think of a good reason to want to
sell the Canadian dollar at this point in time, expects the
red-hot currency to hit parity by the second quarter of 2008.
The market will now turn its attention to key Canadian
consumer price index data on Wednesday, which could provide
another boost to the currency if it exceeds expectations.
BONDS PUSH HIGHER
Canadian bond prices got a bit of a boost from some soft
economic data and also followed a rise in the bigger U.S.
treasuries market to post a rare gain.
Canadian factory shipments in May unexpectedly slipped, but
the bond market took that in stride given the more important
CPI data due on Wednesday.
"I would say the Canadian yield is moving in line with the
U.S. .... on fears of the (U.S.) housing subprime problems,"
said Sal Guatieri, senior economist at BMO Capital Markets.
The two-year bond rose 3 Canadian cents to C$98.39 to yield
4.656 percent, while the 10-year bond gained 31 Canadian cents
to C$95.66 to yield 4.601 percent.
The yield spread between the two-year and 10-year bond
moved to -5.5 basis points from -3.4 basis points at the
The 30-year bond added 80 Canadian cents to C$118.50 to
yield 4.528 percent. In the United States, the 30-year treasury
yielded 5.129 percent.
The three-month when-issued T-bill yielded 4.53 percent,
unchanged from the previous close.
Â© Reuters 2006. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world.
Reuters journalists are subject to the Reuters 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
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."