Canadian $ buoyed by oil price rally
TORONTO: The Canadian dollar was stronger against the greenback on Tuesday, bolstered in large part by US oil prices trading above $50 a barrel.
Crude prices extended gains after British oil company BP became the latest petroleum producer to reduce capital expenditures, adding to expectations that spending cuts will help trim output and deplete some of the excess supply that has driven crude prices down about 50 per cent since June.
Canada is a major crude exporter and its currency has tracked plummeting oil prices. But the loonie has rebounded in recent sessions from a nearly six-year low of C$1.28 against the
greenback, or 78.13 US cents, helped by a more than 13 per cent rebound in oil prices.
"Oil has been the catalyst that's got things moving ... but (investor) positioning is really exaggerating the moves," said Adam Cole, global head of FX strategy at RBC Capital Markets in
London.
"CAD throughout the course of January was by far worst performer in G10 space. We have in the past found that CAD - the commodities currencies - have a tendency to overshoot in
January."
At 9:30 a.m. EST (1430 GMT), the Canadian dollar was at C$1.2540 to the greenback, or 79.74 US cents, stronger than Monday's close of C$1.2577, or 79.51 US cents.
On the data front, investors were awaiting Canadian trade numbers for December as well as January employment figures for the United States and Canada later in the week for more insight into the health of the neighboring economies.
Strategists still forecast further weakness in the Canadian dollar, with the Bank of Canada widely expected to cut interest rates again as early as next month.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 5.5 Canadian cents to yield 0.421 per cent and the benchmark 10-year was 41 Canadian cents to yield 1.277 per cent.
Crude prices extended gains after British oil company BP became the latest petroleum producer to reduce capital expenditures, adding to expectations that spending cuts will help trim output and deplete some of the excess supply that has driven crude prices down about 50 per cent since June.
Canada is a major crude exporter and its currency has tracked plummeting oil prices. But the loonie has rebounded in recent sessions from a nearly six-year low of C$1.28 against the
greenback, or 78.13 US cents, helped by a more than 13 per cent rebound in oil prices.
"Oil has been the catalyst that's got things moving ... but (investor) positioning is really exaggerating the moves," said Adam Cole, global head of FX strategy at RBC Capital Markets in
London.
"CAD throughout the course of January was by far worst performer in G10 space. We have in the past found that CAD - the commodities currencies - have a tendency to overshoot in
January."
At 9:30 a.m. EST (1430 GMT), the Canadian dollar was at C$1.2540 to the greenback, or 79.74 US cents, stronger than Monday's close of C$1.2577, or 79.51 US cents.
On the data front, investors were awaiting Canadian trade numbers for December as well as January employment figures for the United States and Canada later in the week for more insight into the health of the neighboring economies.
Strategists still forecast further weakness in the Canadian dollar, with the Bank of Canada widely expected to cut interest rates again as early as next month.
Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 5.5 Canadian cents to yield 0.421 per cent and the benchmark 10-year was 41 Canadian cents to yield 1.277 per cent.
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