CANADA’S FX DEBT – Canadian Dollar Falls Most in 4 Months as Investors See Maximum Growth

(Add strategist comments, market details, update prices) * Canadian dollar weakens 0.9% against greenback * Hit its lowest level since April 23 at 1.2494 * US oil price drops 2.4% * Canadian 10-year yield hits 4 months lower at 1.307% By Fergal Smith TORONTO, July 6 (Reuters) – Canadian dollar has fallen to a two-month low from its significantly stronger US counterpart on Tuesday, as oil prices fell and investors assessed signs that the pace of the global economic recovery is peaking. Canada is a major exporter of raw materials, including oil, so the loonie has benefited this year from the rebound in the global economy following the coronavirus crisis. “There is a school of thought that you sell the recovery trade when the pace of growth peaks,” said Adam Button, chief currency analyst at ForexLive. “The pace of growth from the third quarter will slow down.” A gauge of activity in the U.S. services sector showed moderate growth in June, down from the record pace in May, as oil pulled back from a multi-year high as OPEC + producers clashed over plans to increase supply. U.S. crude futures were down 2.4% to $ 73.37 per barrel, as the Canadian dollar traded down 0.9% to 1.2456 against the greenback , or 80.28 US cents, its largest decline since February 26. It hit its lowest level since April 23 at 1.2494. . Among the G10 currencies, only the Norwegian krone fell further. Norway is also a major oil producer. The US dollar appreciated against a basket of major currencies ahead of Wednesday’s release of the minutes of the Federal Reserve’s June meeting. The meeting resulted in a surprise shift to more hawkish directions from the central bank. The Canadian jobs report for June is due on Friday, which may offer clues to the Bank of Canada’s policy outlook. Some analysts expect the BoC to cut back on bond purchases again when interest rates are announced next week. Canadian bond yields fell on a flatter curve, following the movement of US Treasuries. The 10-year hit its lowest since February 24 at 1.307% before recovering slightly to 1.328%, down 7.3 basis points on the day. (Reporting by Fergal Smith in Toronto Editing by Alison Williams and Matthew Lewis)

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