Canadian dollar ends lower but holds above parity
By Frank Pingue
TORONTO, Oct 2 (Reuters) - The Canadian dollar closed lower
versus the U.S. currency on Tuesday, but it managed to stay
above parity even though lower commodity prices convinced
investors to take profits after some sharp gains.
Canadian bond prices, with no Canadian data to consider,
drifted lower on the short end ahead of key data later in the
week that could offer more evidence of a strong economy.
The Canadian dollar closed at 99.76 Canadian cents to the
U.S. dollar, or US$1.0024, down from Monday's close of 99.14
Canadian cents to the U.S. dollar, or US$1.0087.
Despite the lower close, the Canadian dollar has managed to
close above parity in each of the last three sessions as the
combination of weakness in the greenback and higher commodity
prices opened the door to gains.
"It's probably just profit-taking after the (Canadian
dollar's) huge gain yesterday ... and oil prices and gold
prices are down," said Sal Guatieri, senior economist at BMO
The Canadian dollar spent the session in a relatively wide
range of 99.62 Canadian cents to the U.S. dollar and C$1.0012
to the U.S. dollar.
With no economic data due until later in the week,
investors will focus on Bank of Canada Deputy Governor David
Longworth's speech in Toronto late Wednesday.
Comments from the deputy governor will be watched to see if
the Bank of Canada has shifted its bias towards easing monetary
policy ahead of its next scheduled rate announcement on Oct.
The Bank of Canada's key overnight rate was left steady at
4.50 percent in September, while the U.S. Federal Reserve's
federal funds rate is at 4.75 percent.
Canadian bond prices ignored a slight rally in the bigger
U.S. treasuries market and slipped on the short end ahead of
Canadian data later in the week that could point to a healthy
Canada's September jobs report is due on Friday, as is the
U.S. jobs report.
Dealers will be scanning both for clues on whether the Fed
will cut interest rates at the end of October, and the Bank of
Canada on Oct. 16.
The Bank of Canada is leaving C$300 million in the Large
Value Transfer System overnight on Tuesday and plans to leave
C$300 million in the system on Wednesday, the central bank
The two-year bond dropped 6 Canadian cents to C$100.29 to
yield 4.105 percent, while the 10-year bond rose 1 Canadian
cent to C$97.46 to yield 4.324 percent.
The yield spread between the two-year and 10-year bond
moved to 21.9 basis points from 24.8 at the previous close.
The 30-year bond rose 9 Canadian cents to C$109.83 to yield
4.403 percent. In the United States, the 30-year treasury
yielded 4.772 percent.
The three-month when-issued T-bill yielded 4.00 percent,
down from 4.01 percent at the previous close.