Canadian dollar climbs as greenback sluggish
TORONTO, Nov 27 (Reuters) - The Canadian dollar edged
higher against the U.S. dollar on Monday, as the greenback
continued to face heavy selling versus higher-yielding overseas
currencies.
Domestic bond prices softened alongside U.S. treasuries, as
market volumes slowly ramped up after last week’s U.S.
holiday-related sluggishness.
At 9:40 a.m. (1440 GMT), the Canadian dollar was at
C$1.1331 to the U.S. dollar, or 88.25 U.S. cents, up from
C$1.1357 to the U.S. dollar, or 88.05 U.S. cents, at Friday’s
session close.
The Canadian dollar touched a two-week high against the
U.S. dollar, which continued to be stung by concerns about
potential U.S. rate cuts and central banks diversifying their
reserves out of the U.S. currency.
Against European currencies such as the euro and the
British pound, the Canadian dollar has been steadily weaker, a
trend that is expected to continue as traders take a dim view
of expected interest rate cuts eventually in Canada and the
United States.
“Canada hasn’t actually moved all that much overnight relative to the other markets, and I think that theme of underperformance of the Canadian dollar is one that sticks with us for while,” said Shaun Osborne, chief currency strategist at TD Securities.
The euro’s rise was cooled on Monday by comments from
French Finance Minister Thierry Breton that vigilance would be
needed on the U.S. dollar’s weakening and that the euro would
be discussed with EU finance ministers later in the day.
Last week’s sharp moves came in thin trading, with U.S.
markets closed on Thursday for Thanksgiving.
With trading volumes rebounding on Monday, the market’s
focus is expected to turn towards economic data.
In Canada, the highlight will be third-quarter current
account data due on Wednesday, followed by third-quarter
economic growth data on Thursday, and November jobs data to
finish the week. U.S. traders will also sift though a thick
stack of reports.
BONDS EASE
Domestic bond prices eased in sympathy with U.S.
treasuries, as dealers gave back some recent gains ahead of a
heavy dose of economic reports due this week.
The two-year bond declined 7 Canadian cents to C$100.55 to
yield 3.963 percent, while the 10-year bond slipped 14 Canadian
cents to C$100.14 to yield 3.981 percent.
The yield spread between the two-year and 10-year bond
moved to 4.4 basis points from 3.6 at the previous close.
The 30-year bond slid 42 Canadian cents to C$127.05 to
yield 4.072 percent. In the United States, the 30-year treasury
yielded 4.677 percent.
The three-month when-issued T-bill yielded 4.18 percent, up
from 4.17 percent at the previous close.