Canadian dollar notches 1-week high as GDP gain crimps rate cut bets
Published Mar 29, 2019 09:34
Canadian dollar notches 1-week high as GDP gain crimps rate cut bets
* Canadian dollar rises 0.7 percent against the U.S. dollar
* Loonie touches strongest level since March 21 at 1.3342
* Price of U.S. oil rise 2.1 percent
* Bond prices fall across the yield curve
TORONTO, March 29 (Reuters) - The Canadian dollar rallied to a one-week high against its U.S. counterpart on Friday as investors reduced bets for a Bank of Canada interest rate cut this year after data showed surprising strength for the domestic economy in January.
The Canadian economy grew by 0.3 percent in January from December, fully offsetting the declines of the last two months, Statistics Canada said. Analysts had forecast a flat month. of an interest rate cut by December dropped to about 50 percent from nearly 70 percent before the data, the overnight index swaps market indicated. BOCWATCH
Adding to support for the loonie, U.S. crude oil futures CLc1 were up 2.1 percent at $60.56 a barrel, supported by OPEC-led supply cuts and U.S. sanctions against Iran and Venezuela. Oil is one of Canada's major exports. O/R
At 9:06 a.m. EDT (1306 GMT), the Canadian dollar CAD=D4 traded 0.7 percent higher at 1.3345 to the greenback, or 74.93 U.S. cents. The currency touched its strongest intraday level since March 21 at 1.3342.
The loonie was on track to fall 1.3 percent in March. Still, it has advanced 2.2 percent in the first quarter, the second best performance in the G10 after sterling.
Gains for the loonie on Friday came as the latest round of U.S.-China trade talks ended on a positive note, boosting stocks. government bond prices were lower across the yield curve, with the two-year CA2YT=RR down 11.5 Canadian cents to yield 1.553 percent and the 10-year CA10YT=RR falling 55 Canadian cents to yield 1.626 percent.
The gap between Canada's 10-year yield and the 3-month T-bill narrowed by 5.7 basis points to a spread of minus 4 basis points. The curve inverted last Friday for the first time since 2007.
Investors trying to work out whether the inversion of the U.S. yield curve signals a looming recession may find clues, but little comfort, in the Canadian bond market, which is less distorted by central bank buying.
Get The App
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.