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CANADA FX DEBT-C$ weakens on corporate selling as greenback climbs

Published 2017-02-17, 04:50 p/m
© Reuters.  CANADA FX DEBT-C$ weakens on corporate selling as greenback climbs
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(Adds analyst quotes and details on threat of proposed U.S. border adjustment tax and CFTC data and updates prices)

* Canadian dollar ends at C$1.3099, or 76.34 U.S. cents

* Loonie touches its weakest since Feb. 10 of C$1.3126

* Bond prices end higher across the yield curve

* 10-year yield hits one-week low at 1.694 percent

By Fergal Smith

TORONTO, Feb 17 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Friday, pressured by corporate selling ahead of a long weekend and broader gains for the greenback.

For the week, the loonie dipped 0.1 percent. It was the second straight week that the loonie edged lower after having reached on Jan. 31 its strongest level in four months of C$1.2969 against the greenback.

"The market really wants to take a run below C$1.30, but it's just not quite there yet," said Adam Button, currency analyst at ForexLive.

The Canadian dollar CAD=D4 ended at C$1.3099 to the greenback, or 76.34 U.S. cents, slightly weaker than Thursday's close of C$1.3080, or 76.45 U.S. cents.

"There's talk about corporate demand (for U.S. dollars) going through today," Button said.

"A long weekend kind of move."

Monday is a market holiday for both Canada and the United States.

The currency's strongest level of the session was C$1.3061, while it touched its weakest since Feb. 10 of C$1.3126.

The U.S. dollar .DXY rose against a basket of currencies, leaving it little changed on the week following mildly hawkish comments from Federal Reserve Chair Janet Yellen and surprisingly strong U.S. data on retail sales and consumer prices.

"Given all the news and data over the past week, the U.S. dollar should be much higher," Button said.

The recent strengthening of the Canadian dollar belies the threat of a proposed U.S. border adjustment tax that could slam the currency due to Canada's heavy reliance on exports to its southern neighbor, forex strategists and fund managers say. speculators increased bullish bets on the Canadian dollar to the most since September, data from the Commodity Futures Trading Commission and Reuters calculations showed. Canadian dollar net long positions rose to 19,340 contracts as of Feb. 14 from 8,550 a week earlier.

U.S. crude CLc1 prices settled 4 cents higher at $53.40 a barrel. Oil is one of Canada's major exports. O/R

Canadian government bond prices rose across the yield curve in sympathy with U.S. Treasuries as concerns over the French election helped support demand for safe-haven assets.

The two-year CA2YT=RR rose 3.5 Canadian cents to yield 0.778 percent and the 10-year CA10YT=RR climbed 28 Canadian cents to yield 1.711 percent.

The 10-year yield touched its lowest intraday level since Feb. 10 at 1.694 percent.

Foreign investors bought C$10.23 billion worth of Canadian securities in December, sealing a new annual record for purchases of bonds, stocks and money market paper.

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