Wednesday, 07 October 2015 20:34
TORONTO: The Canadian dollar firmed for the sixth straight session against the US dollar on Wednesday, touching levels not seen in nearly two months as crude oil prices pushed higher on evidence supplies were falling and demand was rising.
Oil, a major Canadian export, has been a significant drag on the loonie for more than a year now, with the currency plunging to multi-year lows alongside crude prices that have more than halved since June 2014.
Oil prices have rallied over the last four sessions, however, with Brent closing above $ 50 a barrel for the first time in a month on Tuesday and US light crude approaching $ 50.
At 9:59 a.m. EDT (1359 GMT), the Canadian dollar
was trading at C$ 1.2981 to the greenback, or 77.04 US cents, stronger than the Bank of Canada’s official close of C$ 1.3027, or 76.76 US cents on Tuesday.
The currency, which had stumbled to an 11-year low of C$ 1.3457 just last week, was trading between C$ 1.2981 and C$ 1.3053 so far in the session.
FX strategists expect the USD/CAD correction to continue, with RBC Capital Markets noting that C$ 1.2953 and C$ 1.2872 are the next key levels to watch for.
A Reuters poll released on Wednesday indicates the loonie will likely weaken over the coming months, however, due to volatile oil prices, the upcoming Canadian federal election, and expectations the Federal Reserve will eventually hike interest rates.
The value of Canadian building permits issued in August unexpectedly fell by 3.7 percent from July on a decline in construction intentions in several provinces, Statistics Canada data indicated. A Reuters poll showed analysts had expected the value of permits to increase by 0.8 percent.
Canadian employment data for September is due on Friday at 8:30 a.m. EDT.
US crude prices were up 1.85 percent at $ 49.43, while Brent crude added 2.08 percent to $ 53.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 5.5 Canadian cents to yield 0.536 percent and the benchmark 10-year falling 45 Canadian cents to yield 1.468 percent.
The Canada-US two-year bond spread was -9.7 basis points, while the 10-year spread was -61.1 basis points.
