C$ Stays Range-bound as Securities Data Shows Outflow

May 16, 2014 Reuters

May 16, 2014

By Leah Schnurr
The Canadian dollar was little changed against the greenback on Friday, sticking to its recent trading range after data showed foreign investors sold Canadian securities in March.

After some sharp gains in the last two weeks, the loonie has consolidated this week as it has found few catalysts to push it decisively in either direction.

The loonie touched a four-month high last week, trading in the low C$1.08s, but snapped back after a disappointing domestic jobs report last Friday. Analysts expect the currency will be comfortable around either side of the C$1.10 level in the near-term.

“The loonie is just keeping calm and carrying on,” said Scott Smith, senior market analyst at Cambridge Mercantile Group in Calgary.

“This week was really characterized by just taking stock of what has happened the previous two weeks and looking on a go-forward basis at how traders want to position in U.S. dollar-Canadian dollar.”

The Canadian dollar was at C$1.0882 to the greenback, or 91.89 U.S. cents, slightly weaker than Thursday’s close of C$1.0877, or 91.94 U.S. cents.

The currency will likely trade between C$1.0920 and C$1.0860 for the session, said Smith.

Data showed foreign investors sold C$1.23 billion ($1.13 billion) worth of Canadian securities in March, the first divestment this year, while domestic purchases of overseas assets hit a 16-month high.

Canadian government bond yields picked up slightly, lifting the benchmark 10-year off the trough hit on Thursday that brought it to its lowest level since last June.

Canadian bonds had moved alongside a rally in U.S. Treasuries on Thursday. While the sudden move did not have much impact on foreign exchange markets, analysts said it will likely remain on the radar screen heading into next week.

The Canadian 10-year was down 8 Canadian cents to yield 2.264 percent, while the two-year was off 0.3 Canadian cents to yield 1.039 percent.

Read the full article at: http://www.reuters.com/article/2014/05/16/markets-canada-dollar-bonds-idUSL1N0O20MQ20140516