Canadian dollar extends rise above US$ parity
By Frank Pingue
TORONTO, Oct 1 (Reuters) - The Canadian dollar shrugged off
lower oil prices to rise against the U.S. greenback on Monday,
including a stint at a fresh multi-decade highs above parity,
as fundamentals for the currency remained strong.
Domestic bond prices, with no Canadian data to consider
until later in the week, mirrored the movement in the bigger
U.S. treasuries market and finished higher.
The Canadian dollar closed at 99.14 Canadian cents to the
U.S. dollar, or US$1.0087, up from Friday's close of 99.48
Canadian cents to the U.S. dollar, or US$1.005.
During the session the domestic currency hit 99.10 Canadian
cents to the U.S. dollar, or US$1.0091, its highest level since
Since slumping through part of August amid global credit
concerns, the Canadian currency has shot higher thanks to a
solid domestic economy, lofty commodity prices and a weak U.S.
The Canadian dollar broke through parity with the greenback
for the first time in nearly 31 years on Sept. 20 and has not
shown any signs of backing down from the historic level.
"Canada still seems very well in favor," said Steve Butler,
director of foreign exchange trading at Scotia Capital. "The
fundamentals still remain obviously quite strong and it seems
like the little pullbacks in some of the commodities ... don't
seem to be affecting us too much."
The latest rise in the domestic currency came amid a drop
in oil prices, which fell back toward $80 barrel, and a rise in
the greenback against a number of other major currencies.
With no economic data to consider until later in the week,
domestic investors will look ahead to a speech by Bank of
Canada Deputy Governor David Longworth on Wednesday evening to
the Investment Industry Association of Canada in Toronto.
The market will watch closely for any change in the central
bank's language following comments last week by Governor David
Dodge, who added the strong Canadian dollar to the list of
risks to the bank's economic outlook.
The Canadian dollar's ability to close above parity in the
last two North American session bodes well for future gains,
according to some experts.
"We had such a great rally on Friday and a strong close, it
certainly feels like (the Canadian dollar) is going to continue
BONDS END HIGHER
Domestic bond prices, mixed for much of the session, staged
a late rally on the short end to finish higher, taking much of
their direction from the U.S. treasuries market.
Bond dealers will await key domestic data due later in the
week, notably a September jobs report and the business outlook
survey for the third quarter, both due out on Friday.
The Bank of Canada is leaving C$300 million in the Large
Value Transfer System overnight on Monday and is targeting the
same amount for Tuesday, the central bank announced.
The two-year bond added 1 Canadian cent to C$100.35 to
yield 4.077 percent, while the 10-year bond rose 10 Canadian
cents to C$97.45 to yield 4.325 percent.
The yield spread between the two-year and 10-year bond
moved to 24.8 basis points from 25.8 at the previous close.
The 30-year bond gained 38 Canadian cents to C$109.74 to
yield 4.408 percent. In the United States, the 30-year treasury
yielded 4.786 percent.
The three-month when-issued T-bill yielded 4.01 percent, up
from 4.00 percent at the previous close.