CANADA FX DEBT-C$ flat as oil rises and bond spreads widen

Published 2017-11-24, 09:38 a/m
© Reuters.  CANADA FX DEBT-C$ flat as oil rises and bond spreads widen
USD/CAD
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MKC
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LCO
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar at C$1.2716, or 78.64 U.S. cents

* Bond prices lower across the maturity curve

TORONTO, Nov 24 (Reuters) - The Canadian dollar strengthened slightly against its broadly weaker U.S. counterpart on Friday, as U.S. crude prices extended gains at a two-year high while widening bond yield spreads weighed on the loonie in holiday-affected trade.

The currency had slipped from a 10-day high on Thursday after tepid retail sales data, but the market could look past that if oil, a major Canadian export, keeps pushing higher and a quarterly economic growth report due next week beats central bank forecasts, according to TD Securities' North American head of foreign exchange strategy Mark McCormick (NYSE:MKC).

U.S. crude CLc1 prices were up 1.28 percent at $58.76 a barrel, while Brent LCOc1 added 0.19 percent to $63.67, with the North American markets tightening on the partial shutdown of a pipeline linking Canada with the United States. O/R

At 9:21 a.m. ET (1421 GMT), the Canadian dollar CAD=D4 was trading at C$1.2716 to the greenback, or 78.64 U.S. cents, up 0.03 percent.

The currency's strongest level of the session was C$1.2702, while its weakest level was C$1.2747.

TD's McCormick said the Canadian currency would face resistance at C$1.2732 and would need to push below C$1.2675 in the next few days to confirm a strengthening bias.

The Canadian dollar was lower against the euro and British pound but gained against the Japanese yen.

Canadian government bond prices were lower across the maturity curve, with the two-year CA2YT=RR price down 1.5 Canadian cents to yield 1.445 percent and the benchmark 10-year CA10YT=RR 2 Canadian cents lower to yield 1.896 percent.

The Canada-U.S. two-year bond spread widened half a basis point to -29.9 basis points, while the 10-year spread widened 1 basis point to -43.9 basis points.

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