RTRS: Dollar dragged slightly lower as oil prices retreat
By Frank Pingue
TORONTO (Reuters) - The Canadian dollar turned lower versus the U.S. dollar on Wednesday following a string of gains that convinced investors to take profits as prices for oil, a key Canadian commodity, fell.
Bond prices were flat to slightly lower across the curve as dealers shied away from taking major positions ahead of Friday's key Canadian jobs data for October.
At 9:30 a.m., the Canadian unit was at C$1.1529 to the U.S. dollar, or 86.74 U.S. cents, down from C$1.1511 to the U.S. dollar, or 86.87 U.S. cents, at Tuesday's close.
The dip in the Canadian currency follows a string of six straight winning sessions versus the U.S. dollar as it recouped a chunk of its 11.6 percent skid in October.
Earlier on Wednesday the currency rose to C$1.1465 to the U.S. dollar, or 87.22 U.S. cents, its highest level in just over three weeks.
But nagging fears of a global recession lessened investor interest in riskier assets, which ultimately resulted in them snapping up greenbacks.
"The Canadian dollar is softening up a little bit and it seems like the U.S. dollar has regained its footing, so as a result most currencies are stumbling," said Eric Lascelles, chief economics and rates strategist at TD Securities.
Another drag on the currency was a slide in oil prices of more than 2 percent to below $69 a barrel ahead of the release of a U.S. report on crude oil inventory.
The Canadian currency's slide was rather muted as investors felt much of its fall in October in the midst of financial market turmoil, was grossly overdone.
BONDS FLAT
Canadian bond prices were mostly lower as the October jobs report due out at the end of the week kept most dealers huddled on the sidelines.
"I think there is some trepidation against being too bullish on the bond market right now and Canada has really just caught a lick of that and so the market right now in Canada is really not much changed," Lascelles said.
After an unexpected surge of 106,900 new jobs in September, analysts surveyed by Reuters expect a decline of 10,000 in October, and for the unemployment rate to rise to 6.2 percent from 6.1 percent.
Dealers were also awaiting the next batch of domestic data. September's building permits and the Ivey Purchasing Managers Index for October are both set to be released on Thursday.
The Canadian overnight Libor rate was 2.4833 percent, up from 2.3550 percent on Tuesday.
Tuesday's CORRA rate was 2.2439 percent, down from 2.2482 percent on Monday. The Bank of Canada publishes the previous day's rate at around 9 a.m. daily.
The two-year bond was down 5 Canadian cents at C$101.51 to yield 2.000 percent. The 10-year bond dropped 11 Canadian cents to C$103.84 to yield 3.767 percent.
The yield spread between the two- and 10-year bond was 175 basis points, down from 185 basis points at the previous close.
The 30-year bond was up 10 Canadian cents at C$112.50 to yield 4.240 percent. In the United States, the 30-year treasury yielded 4.183 percent.
