By Frank Pingue
TORONTO, Nov 16 (Reuters) - The Canadian dollar capped a
losing week in which it touched a five-week low with a sharp
gain of more than 1 U.S. cent on Friday, as the greenback
trickled lower after some weak U.S. economic data.
Domestic bond prices, with no Canadian economic reports to
consider, ended down after a big rally Thursday and ahead of
key data next week that includes consumer prices.
The Canadian dollar closed at US$1.0269, valuing each U.S.
dollar at 97.38 Canadian cents, up from Thursday's close of
US$1.0151, or 98.51 Canadian cents.
While the move allowed the currency to recoup a chunk of
its recent losses, it still left the week down 3 percent from
last Friday's close, and well off its modern-day high of
US$1.1039, set Nov. 7.
It slid as far as US$1.0138 in Thursday's session, its
lowest level against the U.S. dollar in five weeks.
The bulk of the currency's gains on Friday were attributed
to a weak greenback, which fell after data showed a drop in
U.S. industrial production and weaker than expected foreign
investment in U.S. securities for September.
"The backdrop, overall, is still U.S. dollar negative so I
think the broad trend that we've had in the Canadian dollar
since March is very much alive," said David Watt, senior
currency strategist at RBC Capital Markets.
While the recent selloff marked a complete turnaround from
earlier in the year when the domestic currency was locked into
what seemed like an unstoppable climb, it did not cause much
concern among market experts.
Up until its recent nosedive, the Canadian dollar had been
the best performer out of a group of 16 major currencies since
the beginning of the year.
"I think it's had a tough week but certainly this has been
a long time coming," said Gareth Sylvester of HFIX Plc in San
Francisco." And I don't think an 8 cent depreciation in the
Canadian dollar is too much to ask having seen a 15 cent
appreciation in the last three months.
Canadian bond prices returned some of their gains from
Thursday's rally as North American equity markets ended higher
after a sharp selloff in the previous session where the
two-year yield hit its lowest point in nearly a year.
Investors cheered comments by a U.S. Federal Reserve member
who suggested the fed funds rate may stay on hold in December,
which signaled a possible improvement in the global economic
outlook, according to Eric Lascelles, chief economics and rates
strategist at TD Securities.
"Also, sometimes the market needs a breather after a day
like yesterday when you had these almost absurd-sized rallies,"
The two-year bond fell 1 Canadian cent to C$100.81 to yield
3.833 percent. The 10-year bond slipped 5 Canadian cents to
C$99.02 to yield 4.124 percent.
The yield spread between the two-year and 10-year bond
moved to 29.1 basis points from 29.3 at the previous close.
The 30-year bond fell 23 Canadian cents to C$112.63 to
yield 4.245 percent. In the United States, the 30-year treasury
yielded 4.538 percent.
The three-month when-issued T-bill yielded 4.02 percent,
unchanged from the previous close.
(Editing by Rob Wilson)