By Frank Pingue
TORONTO, Oct 10 (Reuters) - The Canadian dollar finished
higher against the U.S. currency on Wednesday as commodity
prices and a weakening greenback allowed it to reverse losses
suffered earlier in the session.
Bond prices, with no Canadian data to consider, took
advantage of quiet conditions to reclaim a chunk of the losses
suffered late last week due to strong jobs data in Canada and
the United States.
The Canadian dollar closed at 98.02 Canadian cents to the
U.S. dollar, or US$1.0202, up from Tuesday's session close of
98.25 Canadian cents to the U.S. dollar, or US$1.0178.
It fell as low as 98.35 Canadian cents, or US$1.0167, just
before midday but rallied toward the close and finished above
par with the greenback for the 10th straight session.
The bulk of the Canadian dollar's gain was credited to a
weaker U.S. dollar and higher prices for oil and metals, of
which Canada is a major producer and exporter.
The greenback was hobbled by market speculation that the
U.S. Federal Reserve may decide to cut its key federal funds
rate again this year from the current 4.75 percent, although
the bond market was pricing out the chances of a cut this
"It's probably a combination of U.S. dollar weakness and
oil prices are up," said Carlos Leitao, chief economist at
Laurentian Bank of Canada in Montreal. "But it's kind of one of
those in-between weeks when there's not much happening."
Leitao suggested August trade data due on Thursday in both
Canada and the United States could have a noticeable impact on
But any moves in the Canadian dollar will likely be limited
ahead of the Bank of Canada's interest rate announcement on
Oct. 26. The bank is widely expected to leave its key overnight
rate steady at 4.50 percent.
Canadian bond prices took advantage of a relatively quiet
session to reclaim a portion of the steep losses suffered last
week, when figures showed Canada added three times more jobs
than predicted in September.
But the gains were limited as the market continued to price
out the chances of an interest rate cut by the U.S. Federal
Reserve in late October.
The market had been widely expecting the Fed to cut rates,
but minutes from the Fed's Sept. 18 meeting did little to
indicate further easing.
Other data due on Thursday in Canada is the August new
homes pricing index.
The two-year bond rose 6 Canadian cents to C$99.77 to yield
4.365 percent, while the 10-year bond rose 26 Canadian cents to
C$96.54 to yield 4.445 percent.
The yield spread between the two-year and 10-year bond
moved to 8.0 basis points from 8.6 at the previous close.
The 30-year bond gained 45 Canadian cents to C$108.90 to
yield 4.455 percent. In the United States, the 30-year treasury
yielded 4.862 percent.
The three-month when-issued T-bill yielded 4.06 percent, up
from 4.05 percent at the previous clo