Posted on 01/21/2005 5:23:19 PM PST by familyop
TORONTO (Reuters) - The Canadian dollar rose against the U.S. currency on Friday, ending a run of six losing sessions as the greenback retreated on a weak U.S. consumer confidence report and the loonie got a boost from firmer Canadian wholesale trade data.
Canadian bond prices were mixed, as short-term debt prices benefited from falling stock markets, while longer-term bonds lost ground.
The Canadian currency finished at C$1.2212 to the U.S. dollar, or 81.89 U.S. cents, up from C$1.2331 to the U.S. dollar, or 81.10 U.S. cents, at Thursday's session close.
"It's a broader reflection of the U.S. dollar," said Doug Porter, senior economist at BMO Nesbitt Burns.
"Most of the week the U.S. dollar had been firm but it definitely lost ground (Friday) right across the board."
The greenback dropped as a weaker-than-expected U.S. consumer confidence report paved the way for profit-taking in the currency after its recent gains.
The Canadian dollar took strength from a report showing Canadian wholesale trade rose 0.5 percent in November from October. It was the second straight monthly gain and was ahead of analysts' expectations of a 0.3 percent rise.
"The report suggests that the past negative impact of the (stronger) currency on exports may be waning," said Sal Guatieri, senior economist at Bank of Montreal.
Several analysts expect the loonie to continue rising against the greenback.
"We think until the U.S dollar finds a bottom, the next big move in the Canadian dollar is still likely to be higher," Porter said.
BONDS MIXED
Canadian bond prices rebounded from early weakness, taking a cue from U.S. Treasuries, which rallied on the weak consumer confidence report and a drop in U.S. stock markets spurred by rising oil prices.
"The story this week and so far this year has been the steady, relentless period of strength in the bond market," Porter said.
"Some of that is a reflection of persistent underlying weakness in stocks and persistent underlying strength in energy prices."
The Bank of Canada will announce its interest rate policy on Tuesday, but the market is united in expecting no change to the central bank's trend-setting overnight rate, which is currently at 2.50 percent.
The two-year bond rose a slight 1 Canadian cent to C$100.61 to yield 2.908 percent, while the 10-year bond rose 5 Canadian cents to C$105.95 to yield 4.222 percent.
The yield spread between the two-year and 10-year bond was 130.8 basis points, down from 131.5 at the previous close.
The 30-year bond, due 2029, dropped 43 Canadian cents to C$115.67 to yield 4.739 percent. The 30-year U.S. Treasury yielded 4.6490 percent.
The three-month when-issued T-bill yielded 2.48 percent, up from 2.46 percent at the previous close.
/NAFTA
ten to twelve years ago the canadian dollar was worth 90 cents then in order to have jobs the government let the dollar drop to 60 cents against the american dollar. they need the lower value to make movies, sell wood and gas but now they will have to compete on an equal footing. Plus Bush is going to let some timber get cut. Canada is going to have to get to work and not just their immigrants.
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