CAD (Canadian Loonie)

CAD (Canadian Loonie)

Postby winston » Thu May 22, 2008 1:45 pm

Canadian Dollar Reaches Two-Month High, Bonds Fall on Inflation
By Haris Anwar

May 21 (Bloomberg) -- Canada's dollar rose to the highest in more than two months and government bonds fell as traders speculated the Bank of Canada will be less likely to cut its main rate after a report showed inflation accelerated in April.

The Canadian dollar has increased 3.4 percent during the last nine trading days as crude oil reached multiple records. Interest-rate futures in Canada suggest traders reduced bets the central bank will cut borrowing costs further.

``Higher inflation may slow the pace of monetary easing in Canada,'' said Ian Stannard, a senior currency strategist in London at BNP Paribas SA, France's biggest bank. ``The Canadian dollar is picking up some support after the inflation number. The currency can head back to its February high of 97.12 cents'' per U.S. dollar.

Canada's dollar strengthened 0.8 percent to 98.41 cents per U.S. dollar at 3:21 p.m. in Toronto, from 99.23 cents yesterday. Earlier, it touched 98.20 cents, the highest since March 14. One Canadian dollar buys $1.0162.

The Canadian dollar strengthened against 12 of the 16 most- active currencies.

The central bank lowered the target lending rate by a half- percentage point to 3 percent on April 22 to shield the economy from a U.S. economic slowdown.

Canadian consumer prices rose 0.8 percent in April, after a 0.4 percent gain in the previous month, Statistics Canada reported today in Ottawa. The figure compared with the median forecast of a 0.4 percent increase in a Bloomberg News survey of 24 economists.

Core Inflation

The core inflation rate advanced 1.5 percent from a year earlier, compared with 1.3 percent in March that was the slowest since July 2005. Economists predicted that measure would also be unchanged. The monthly core inflation rate of 0.3 percent was also faster than the 0.2 percent economists forecast.

The core rate is used by policy makers as a guide to future trends. It excludes volatile items such as gasoline and fruit and discounts tax cuts such as a reduction in the federal sales tax earlier this year.

Bankers' acceptances futures contracts for September rose 16 basis points, or 0.16 percentage point, to 2.80 percent. The futures have settled at a three-month lending rate averaging 16 basis points above the central bank's target since Bloomberg started tracking the data.

The loonie, as the currency is known because of the image of the bird on the one-dollar coin, has traded near parity with its U.S. counterpart this year after climbing 17 percent in 2007. It touched a 2008 low of C$1.0379 on Jan. 22, and a high of 97.12 cents per U.S. dollar on Feb. 28.

Slowest Economic Growth

Bank of Canada Governor Mark Carney reiterated on May 1 he'll probably need to lower interest rates again after four cuts since December, citing the slowest economic growth in 16 years and below-target inflation. Policy makers next meet on June 10.

The central bank targets the core rate of inflation below 2 percent. The bank's key rate will decline to 2.75 percent by the end of 2008, according to the median forecast in a Bloomberg survey.

``We could see the Canadian dollar continue to do relatively well,'' said Laurent Desbois, president of the Montreal-based currency fund Fjord Capital, which oversees more than $100 million. ``As long as commodity prices stay elevated,'' and the U.S. doesn't face a ``full-blown recession,'' the currency will remain supported.

Crude oil rose to a record above $133 a barrel as U.S. stockpiles unexpectedly dropped and banks raised price forecasts because of supply constraints and demand growth. The oil sands in Alberta contain the largest crude deposits outside the Middle East.

Currency Forecast

Strategists at Morgan Stanley, the world's second-largest securities firm, exited their recommendation to sell the currency against its U.S. counterpart.

``After months of muddling along an uninspired path, the Canadian dollar has started to move,'' London-based Ned Rumpeltin wrote in a note to clients. The strength in the Canadian dollar is ``more related to oil price effects than as a reflection of domestic fundamentals.''

Morgan Stanley recommended selling the Canadian dollar, forecasting the currency would fall to C$1.10, last month.

Bullish on the Loonie

Options traders are the most bullish on the Canadian dollar in four months.

The premium paid on call options that grant the right to buy the currency, over put options which give the right to sell, reached the largest since Jan. 15. The risk-reversal rate for one-month options touched minus 0.1525 percent, with a negative reading indicating a premium for calls relative to puts. As recently as May 19, there was a premium for puts.

Canada's dollar will decline to C$1.08 by the first quarter of 2009, according to the median forecast of 37 analysts in a Bloomberg survey.

The yield on the two-year Canadian government bond rose 15 basis points to 2.91 percent. The price of the 3.75 percent security due in June 2010 fell 28 cents to C$101.65. The yield increased the most since April 1.

The 10-year government bond's yield increased 7 basis points to 3.59 percent. The price of the 4 percent security due June 2017 fell 50 cents to C$103.18. The yield is down 40 basis points this year.

`Scary Inflation Number'

``We got a scary inflation number,'' said Michael Herring, managing director and fixed-income strategist at BMO Capital Markets, a unit of Canada's fourth-largest bank. ``I feel Mark Carney will still cut interest rates. He's less concerned about inflation. He's looking at the stronger Canadian dollar, which will continue to put downward pressure on inflation. People will start building an ease again.''

Canada's two-year bond yield will touch 2.87 percent by the end of this year, with the 10-year yield reaching 3.81 percent, according to the median forecast in a Bloomberg survey.

The yield advantage of the 10-year U.S. Treasury note compared with similar-maturity Canadian government bonds was 23 basis points, up from 14 basis points on April 30. The Canadian 10-year bond yielded 36 basis points more than its U.S. counterpart on Jan. 22.

Canadian government bonds have returned 3.7 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries during the same period returned 2.7 percent.
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Re: Canadian Dollar ( Loonie )

Postby HengHeng » Thu May 22, 2008 4:14 pm

More or less Loonie is a very volatile currency especially when their economy is a very complex one. It seems to be supported by oil but most of the other industries in canada are actually making losses which is pretty depressing despite its booming oil industries.

Reasons : GDP might be high but its people are still poorer.
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Re: Canadian Dollar ( Loonie )

Postby ricky » Fri May 30, 2008 12:25 pm

It's not just the oil industry which is doing well. The resource sector as a whole is doing well (such as fertilizers) and this in turn is propping up the TSX index and real estate prices which have not suffered the same down turn as in the U.S. The loonie should stay in parity with the US dollar and this keeps inflation down as consumer goods are cheaper....All in all good news here up north! :D :D
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Re: Canadian Dollar ( Loonie )

Postby winston » Thu Jun 05, 2008 10:47 pm

Canadian Dollar Falls for a Fifth Day as Commodities Decline
By Haris Anwar

June 5 (Bloomberg) -- The Canadian dollar fell for a fifth day, its longest losing streak in almost five months, as prices of the nation's commodity exports weakened.

Canada's dollar has declined 2.8 percent so far this week as gold and copper depreciated and crude oil traded close to the lowest in three weeks. The U.S. dollar has been strengthening against the major currencies since Federal Reserve Chairman Ben S. Bernanke said June 3 that the central bank is ``attentive'' to the implications of the U.S. currency's decline.

``The market seems to be bailing out of the Canadian dollar,''
said Steve Butler, director of foreign exchange trading at Scotia Capital Inc. in Toronto, a unit of Canada's third-largest bank. ``The general tone of softer commodity prices, shocking comments from Bernanke for a strong U.S. dollar and the convincing move back over parity this week has dramatically changed market sentiment for the Canadian dollar.''

Canada's dollar fell 0.3 percent to C$1.0199 per U.S. dollar at 9:40 a.m. in Toronto, from C$1.0165 yesterday. The last time the currency weakened for five days was during the period ended Jan. 11. The Canadian dollar has fallen 2.1 percent this year versus the U.S. dollar. One Canadian dollar buys 98.08 U.S. cents.

The loonie, as the currency is known because of the image of the bird on the one-dollar coin, has traded near parity with its U.S. counterpart this year after climbing 17 percent in 2007. It touched a 2008 low of C$1.0379 on Jan. 22, and a high of 97.12 cents per U.S. dollar on Feb. 28.

Target Lending Rate

The nation's central bank lowered the target lending rate by a half-percentage point to 3 percent on April 22 to shield the economy from the U.S.-led economic slowdown. The U.S. is Canada's biggest export market, consuming about 80 percent of its exports.

The bank will cut the rate by 25 basis points to 2.75 percent on June 10, according to the median forecast in a Bloomberg survey. A 25-basis-point reduction would cut the nation's interest-rate advantage with the U.S. to 0.75 percentage point.

Canada's dollar has weakened against 15 of the 16 most- active currencies this month. The economy unexpectedly shrank in the first quarter. Gross domestic product, the sum of all goods and services produced in Canada, shrank at an annual pace of 0.3 percent from January to March, after 0.8 percent growth in the previous period. Economists surveyed by Bloomberg News had forecast 0.4 percent growth.

`Tomorrow's Job Report'

``People are positioning before tomorrow's job report and the Bank of Canada's rate decision next week,'' said Jack Spitz, managing director of foreign exchange trading at National Bank of Canada, the nation's sixth-largest bank. ``These two events can provide a catalyst for the currency to break out of its current range, and fall below the C$1.0350 area.''

Employers probably hired 10,000 new workers in May, down from 19,200 in the previous month, according to the median forecast in a Bloomberg survey. Statistics Canada will release the report at 7 a.m. tomorrow.

The yield on the two-year Canadian government bond rose 4 basis points, or 0.04 percentage point, to 2.89 percent. The price of the 3.75 percent security due in June 2010 fell 9 cents to C$101.65.

The 10-year bond yielded 79 basis points more than the two- year security, up from 59 basis points on May 28.

Canada's two-year bond yield will touch 2.92 percent by the end of this year, with the 10-year yield reaching 3.84 percent, according to the median forecast in a Bloomberg survey.

Canadian government bonds have returned 3.2 percent in 2008, according to Merrill Lynch & Co. index statistics. U.S. Treasuries returned 2.1 percent so far this year.
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Re: Canadian Dollar ( Loonie )

Postby winston » Tue Nov 04, 2008 8:28 am

Canada's currency fell and is poised for its worst monthly performance in almost six decades as commodities including oil, natural gas and gold slumped.

The Canadian dollar weakened 13 percent in October, the most since at least 1950, according to Bloomberg and Bank of Canada data. Crude oil, which accounts for 21 percent of the weighting in the central bank's Commodity Price Index, has weakened 36 percent this month.

"This was a month when paradigms were reassessed," said David Watt, a senior currency strategist at RBC Capital Markets in Toronto. "We were part of the global growth story over the past few years and now that's taking on water quickly. Commodity prices are getting buried and the Canadian dollar is getting hammered."

– Bloomberg
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Re: Canadian Dollar ( Loonie )

Postby winston » Sat Sep 12, 2009 3:48 pm

Buy Canadian Dollar If Government Falls, RBC Capital Recommends
By Chris Fournier

Sept. 11 (Bloomberg) -- Investors should buy the Canadian dollar against its U.S. counterpart and hold it for four to six days if a no-confidence vote topples the country’s government, RBC Capital Markets said.

Prime Minister Stephen Harper’s minority Conservative Party government faces defeat by non-confidence vote as early as next week after the main opposition Liberal Party withdrew its support earlier this month. The result would send Canadian voters to the polls.

“The possible fall of the government and a concomitant election call will open a window of opportunity for short-term Canadian-dollar players, even though the political landscape is unlikely to change dramatically,” Matthew Strauss, an RBC senior currency strategist in Toronto, wrote in a note to clients today.

The currency, nicknamed the loonie, benefits from “the certainty that an election call brings, normally after weeks or even months of speculation,” Strauss wrote. Even so, profit margins often are small and bets on the currency need to be held for several days, he wrote.

The U.S. dollar weakened against its Canadian counterpart in the days following six out the seven election calls since 1988, with “tactical trades” held four to six days yielding the best results, Strauss wrote.

Canada’s dollar was little changed at C$1.0763 per U.S. dollar at 1:48 p.m. in Toronto. One Canadian dollar buys 92.91 U.S. cents. RBC, a unit of Canada’s largest bank, predicts the loonie will strengthen to C$1.05 by the end of 2010.

http://www.bloomberg.com/apps/news?pid= ... fUQAl1tf4k
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Re: Canadian Dollar ( Loonie )

Postby winston » Fri Oct 09, 2009 8:49 am

I've a small position in the Loonie ...

Canada’s Dollar Touches One-Year High on Outlook for Recovery By Chris Fournier

Oct. 8 (Bloomberg) -- Canada’s dollar touched the strongest level in more than a year amid speculation a global recovery may quicken as stocks and commodities rose, U.S. jobless claims fell and Australia posted better-than-expected jobs data.

“All signs are great for the Canadian dollar,” said Firas Askari, head currency trader in Toronto at BMO Capital Markets, a unit of Canada’s fourth-largest lender. The only reason the currency isn’t stronger is “everyone is already long the Canadian dollar.” A long position is bet a currency will rise.

The Canadian currency appreciated 0.9 percent to C$1.0520 per U.S. dollar at 4:50 p.m. in Toronto, from C$1.0612 yesterday. It touched C$1.0506, the strongest level since Sept. 30, 2008. One Canadian dollar buys 95.06 U.S. cents.

The loonie briefly pared gains after Paul Jenkins, Bank of Canada senior deputy governor, said persistent strength in the Canada’s dollar remains a risk to its economic recovery.

Jenkins also repeated the central bank’s commitment to keep the benchmark interest rate at a record low 0.25 percent through June 2010 unless the inflation outlook shifts, according to the text of his speech today in Vancouver.

Canada’s dollar is 16 percent higher this year against its U.S. counterpart as a recovery in the world’s economy from the worst financial crisis since the Great Depression sparks demand for commodities. Canada gets more than half its export revenue from raw materials.

Correlation With Crude

The Canadian dollar has a 30-day correlation coefficient of 0.76 with crude oil, compared with 0.49 over the past year, according to Bloomberg data. That indicates moves between the currency and oil are becoming more closely aligned. A reading of 1 would indicate they move in lockstep.

http://www.bloomberg.com/apps/news?pid= ... mFWLe4Ujbg
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Re: Canadian Dollar ( Loonie )

Postby kennynah » Fri Oct 09, 2009 3:46 pm

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Re: Canadian Dollar ( Loonie )

Postby LenaHuat » Fri Oct 09, 2009 7:57 pm

Lovely :D :D
Agree, it's an excellent idea to go long on the Canadian $$. Their financial system is almost unscathed by this crisis and resources will drive its economy up for the next 5 years at least.
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Re: Canadian Dollar ( Loonie )

Postby LenaHuat » Mon Oct 12, 2009 1:50 pm

Looney Tunes reminds me of Mel Blanc, the comedian and voice-over for Bugs Bunny, Tweety Bird.....

I like this man. He's kept faith with his fans right to the end:-
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