> Finance & Stock Exchange > Forex > Money Markets
Canadian dollar up over a cent, bonds rally
Reuters: [2008-05-09 22:52:00]
By John McCrank
TORONTO, May 9 (Reuters) - The Canadian dollar rose more
than a cent against the U.S. dollar on Friday, a move
attributed to technical factors as well as domestic jobs data,
against a positive backdrop of record-setting oil prices.
Domestic bond prices rallied, playing catch-up with the
larger U.S. market.
The Canadian dollar closed at C$1.0056 to the U.S. dollar,
or 99.44 U.S. cents, up from C$1.0171 to the U.S. dollar, or
98.32 U.S. cents, at Thursday's close.
It was a choppy week for the currency, bouncing from C$1.02
to the U.S. dollar to parity over two days, and then back to
C$1.0170 in two days, but ultimately it ended 1.4 percent
higher.
"I don't think there is anything really in terms of data
releases that would have spurred that level of volatility,"
said Gareth Sylvester, senior currency strategist at HIFX in
San Francisco.
"So that would lead us to suggest it was more of a
technical-style move rather than anything else," he said.
The Canadian dollar shot higher early in the session after
a report showed the economy performed better than expected in
April. The currency then gave back some of its gains as details
of the data were digested.
The Statistic Canada report showed 19,200 jobs were created
in April, while 10,000 had been expected.
Other details, however, showed the unemployment rate edged
higher to 6.1 percent from 6.0 percent in March, the wage
measure component eased, and private-sector employment
declined.
"The continuing shedding of manufacturing jobs is really a
concern," Sylvester added. "You're sitting at 111,000 jobs lost
year-to-date (in manufacturing), so that's still a concern."
With the mixed reading, the week's most anticipated piece
of data did nothing to alter the outlook for domestic interest
rates. The Bank of Canada is still expected to lower its key
rate by 25 basis points to 2.75 percent at its next scheduled
announcement date on June 10.
A rise in oil prices to a new high above $126 a barrel
provided a positive backdrop for the Canadian dollar. However,
concerns about the sustainability of prices at that level, in
light of slowing global growth, prevented crude from being a
rallying point for the currency, Sylvester said.
Other domestic data showed the rising prices for oil and
natural gas exports boosted Canada's trade surplus to C$5.53
billion in March.
BONDS RISE
Bond prices rose, ignoring the higher headline numbers in
the economic data, as they were not seen altering the interest
rate outlook.
"You had a big move down in U.S. yields this week that
Canada really was somewhat insulated from, and I think it's
just a bit of a catch up for that," said Mark Chandler, fixed
income strategist at RBC Capital Markets.
Bond yields in prices move in opposite directions.
The two-year bond was up 5 Canadian cents at C$102.02 to
yield 2.731 percent. The 10-year rose 39 Canadian cents to
C$103.16 to yield 3.587 percent.
The yield spread between the two- and 10-year bonds was
85.6 basis points, down from 87.8 at the previous close.
The 30-year bond added 98 Canadian cents to C$115.53, for a
yield of 4.082 percent. In the United States, the 30-year
treasury yielded 4.527 percent.
The three-month when-issued T-bill yielded 2.62 percent, up
from 2.60 percent at the previous close.
((john.mccrank@thomsonreuters.com; +1 416 941 8083; Reuters
Messaging: john.mccrank.reuters.com@reuters.net))
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<CA/MMKT1> <CA/MMKT2> <CA/DEBT> <BONDS> <TREASURY> For
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Keywords: MARKETS CANADA DOLLAR BONDS
DIARY-Federal Reserve Events
Reuters: [2008-05-09 22:34:00]
TO HAVE EVENTS INCLUDED, PLEASE CONTACT THE WASHINGTON
NEWSROOM AT 202-898-8370/202-898-8318, OR BY FAX AT
202-898-8383 OR 202-842-2527
THIS DIARY IS FILED DAILY.
***Denotes a new entry.
--------------------------------------------------------
MEETINGS
FOMC MEETING DATES (one-day meetings on Tuesday; two-day
meetings Tuesday-Wednesday, except where noted. Decision
released on second day of two-day meetings)
2008
June 24-25 (Decision expected at 1415 EDT/1815 GMT)
August 5 (Decision expected at 1415 EDT/1815 GMT)
September 16 (Decision expected at 1415 EDT/1815 GMT)
October 28-29 (Decision expected at 1415 EDT/1815 GMT)
December 16 (Decision expected at 1415 EST/1915 GMT)
2009
January 27-28 (Decision expected at 1415 EST/1915 GMT)
----------------------------------------------------------
FEDERAL RESERVE CHAIRMAN BEN BERNANKE
Tuesday, May 13
WASHINGTON - Federal Reserve Chairman Ben Bernanke speaks
VIA SATELLITE on "Federal Reserve Liquidity Measures" before
the Federal Reserve Bank of Atlanta's "Financial Market
Reforms: Taking Stock" 2008 Financial Markets Conference in Sea
Island, Ga., 0820 EDT/1220 GMT. No Q&A. Contact: Pierce Nelson,
404 498 8748 or pierce.nelson@atl.frb.org; or Jean Tate, 404
498 8035 or jean.tate@atl.frb.org. Coordinates: Satellite:
Horizons 2; Band KU; Transponder 15; Slot E, 9MHz; Downlink
Freq. 11922.5000 (V)
Thursday, May 15
CHICAGO - Federal Reseve Chairman Ben Bernanke speaks on
"Risk Management and Banking Operations" before the Federal
Reserve Bank of Chicago's "Bank Structure and Competition
Credit Market Turmoil: Causes, Consequences and Cures"
conference, 0830 CDT/0930 EDT/1330 GMT. Audience Q&A expected.
Hotel Intercontinental, 505 N. Michigan Ave. Contact: Laura
LaBarbera, 312 322-2387 or Laura.LaBarbera@chi.frb.org.
Information:
http://www.chicagofed.org/news_and_conferences/conferences_and_events/2008_bsc_agenda.cfm
Thursday-Friday, May 29-30
BASEL, Switzerland - Bank for International Settlements'
Basel Committee on Banking Supervision hosts "Risk Transfer
Mechanisms and Financial Stability" conference. Speakers
include (INVITED) Federal Reserve Chairman Ben Bernanke.
Details TBA. Information:
http://www.bis.org/bcbs/events/rtf08rtmfs.htm
Wednesday, June 4
CAMBRIDGE, Mass. - (INVITED) Federal Reserve Chairman Ben
Bernanke speaks at Harvard University, 1400 EDT/1800 GMT.
Speech topic, Q&A, other details TBA. Harvard Yard,
Tercentenary Theater. Contact: 617 495-1585. Information:
http://www.news.harvard.edu/gazette/2008/04.10/99-classday.html
Tuesday, June 10
CHATHAM, Mass. - (INVITED) Federal Reserve Chairman Ben
Bernanke gives dinner speech before the Federal Reserve Bank of
Boston "Understanding Inflation and the Implications for
Monetary Policy: A Phillips Curve Retrospective" conference,
1800 EDT/2200 GMT. Other details TBA. Wequassett Inn, Pleasant
Bay Road. Contact: Tom Lavelle, 617 973 3647 or
Thomas.L.Lavelle@bos.frb.org; or Donna Dulski, 617 973-3029 or
Donna.Dulski@bosfrb.org; hotel 800 225 7125. Information:
http://www.bos.frb.org/phillips2008
----------------------------------------------------------
OTHER FED OFFICIALS
Monday, May 12
PALATINE, Ill. - Federal Reserve Bank of Chicago President
Charles Evans speaks on the economic outlook before the Harper
College Economic Forum, 0815 CDT/0915 EDT/1315 GMT. Audience
and media Q&As expected. Harper College, Wojcik Conference
Center, 1200 W. Algonquin Road. RSVP: Maria Coons, 847 925
6143
Tuesday-Wednesday, May 13-14
SEA ISLAND, Ga. - Federal Reserve Bank of Atlanta
"Financial Market Reforms: Taking Stock" 2008 Financial Markets
Conference. The Cloister, 100 Cloister Drive. Contacts: Pierce
Nelson, 404 498 8748 or pierce.nelson@atl.frb.org; or Jean
Tate, 404 498 8035 or jean.tate@atl.frb.org
TREASURIES-Prices edge up on renewed credit concerns
Reuters: [2008-05-09 21:59:00]
(Adds fresh comments, updates prices, changes byline)
By John Parry
NEW YORK, May 9 (Reuters) - U.S. government debt prices edged up on Friday as resurgent credit worries sparked demand for safe-haven Treasuries, propelling benchmark 10-year notes to their best week in nearly two months.
Bonds gained following news late Thursday that American International Group, the world's largest insurer, posted a record $7.8 billion quarterly loss. U.S. stock indices also fell sharply.
"Every time the (stock) market gets weak you start to see that safe-haven bid come back into play. AIG's earnings were miserable and that affected the financials," said Joe Keetle, senior wealth manager at Dawson Wealth Management in Cleveland, Ohio. The dismal AIG results fanned doubts about a recovery in credit markets. Other financial companies including Swiss bank UBS <UBSN.VX> and U.S. home-finance company Fannie Mae <FNM.N> have recently announced asset write-downs and credit losses stemming from subprime mortgages.
Credit fears have dragged equity markets from their recent peaks, and benchmark 10-year Treasury yields from their four-month highs reached earlier this week.
"Even if you have turned the corner and the worst is behind us on the risk aversion side, markets are still concerned that there is still bad news that will come out on the asset-quality side that has kept markets jittery and led to a drop in Treasury yields in the past few days," said Robert Tipp, chief investment strategist with Prudential Fixed-Income Management in Newark, New Jersey.
The benchmark 10-year note's price, which moves inversely to its yield, rose 2/32 <US10YT=RR> for a yield of 3.77 percent, down from 3.78 percent late Thursday. The yield briefly moved above 3.95 percent just two days ago.
Major U.S. stock indexes were down as much as 0.8 percent following a 2 percent drop in Tokyo and a 1 percent fall in Europe.
Another positive factor for Treasuries was the roughly $70 billion investors received on maturing U.S. government bonds from the Treasury quarterly refunding this week.
Investors plowed back some of this record amount of cash into Treasuries in anticipation of seasonally strong performance after the May refunding, analysts said.
Bonds' gains were mitigated by a bigger-than-expected narrowing in the March trade deficit, boosting the prospects of an upward government revision on first-quarter gross domestic product, analysts said.
A stronger first-quarter GDP reading will support the view that the U.S. economy would avoid a recession and alleviate pressure on the Federal Reserve to trim short-term interest rates further, analysts said.
The Treasury market also traded off its initial highs on some reassuring comments from Citigroup's new chief executive, Vikram Pandit, after the largest U.S. bank unveiled a plan to sell $400 billion of assets in a bid to become more efficient and profitable.
Citi has suffered hefty losses from the subprime mortgage debt crisis and its fallout.
"Pandit is selling his program well. People are a little less fearful and they are taking some profits on bonds," said Andrew Brenner, senior vice president at MF Global in New York, said of the Citi's CEO remarks in conference call with analysts and investors.
Still, there are plenty of downside risks to the economy, including persistent bottlenecks in the credit markets and a relentless surge in oil which hit a series of record highs this week. U.S. crude broke above $126 a barrel on Friday.
Two-year notes dipped 1/32 in price for a 2.25 percent yield <US2YT=RR>, versus 2.23 percent late Thursday. The two-year yield was on track for its biggest weekly drop since March.
More credit market fallout will likely keep Treasury note yields trading at quite low levels. However, the yield range for past two months, of 1.25 percent to roughly 2.50 percent, for the two-year Treasury note <US2YT=RR> should drift higher by about 50 basis points toward the end of the year, Tipp expects.
That's provided sentiment in riskier asset markets "will not go as seriously to the dark side as a few months ago," he cautioned.
Thirty-year bonds <US30YT=RR>, after Thursday's well-bid reopening auction, traded up 8/32 for a yield of 4.51 percent versus 4.55 percent late Thursday. (Reporting by John Parry and Richard Leong; Editing by Tom Hals) ((John.Parry@reuters.com ; +1 646 223 6303; Reuters Messaging:
john.parry.thomsonreuters.com@reuters.net )) Keywords: MARKETS BONDS
-------MARKET SNAPSHOT AT 3:44 p.m. (1944 GMT)-------
June T-Bond <USM8> 117-06/32 (+14/32)
June 10-Year note <TYM8> 116 (+07/32)
Change vs Current
previous New York close yield
Three-month bills <US3MT=RR> 1.66 (0.04) 1.6945
Six-month bills <US6MT=RR> 1.715 (0.04) 1.7537
Two-year note <US2YT=RR> 99-24/32 (-01/32) 2.2513
Five-year note <US5YT=RR> 100-22/32 unch 2.9749
10-year note <US10YT=RR> 100-26/32 (+02/32) 3.7767
30-year bond <US30YT=RR> 97-17/32 (+09/32) 4.5274
----------------------------SWAP SPREADS----------------
May 9 May 8 May 7 May 6 May 5 May 2 May 1
2-YR 80.50 78.75 80.25 81.25 79.25 78.75 80.75
3-YR 84.50 83.75 85.00 86.25 84.50 84.75 84.50
5-YR 79.50 77.75 78.00 78.50 76.25 75.75 75.25
10-YR 60.00 58.75 61.00 63.00 61.00 61.25 61.00
30-YR 31.00 30.25 32.00 34.50 33.00 33.00 32.50
Keywords: MARKETS BONDS
TREASURIES-Bonds rise on renewed credit worries
Reuters: [2008-05-09 18:03:00]
(Updates market prices)
By Richard Leong
NEW YORK, May 9 (Reuters) - U.S. Treasury debt prices rose on Friday as renewed credit worries kindled demand for low-risk investments, sending benchmark 10-year notes to their best week in nearly two months.
Bonds climbed following news that American International Group <AIG.N>, the world's largest insurer, posted a record $7.8 billion quarterly loss. For details, see [ID:nN09565485]
"We saw some pretty good buying ... on safe-haven demand on renewed concerns on credit issues with AIG's losses," said Kim Rupert, managing director of global fixed-income analysis with Action Economics LLC in San Francisco.
The dismal AIG results fanned doubts about a recovery in credit markets. Other financial companies including Swiss bank UBS <UBSN.VX> and U.S. home-finance company Fannie Mae <FNM.N> have announced this week a fresh wave of asset write-downs and credit losses stemming from subprime mortgages.
Credit fears have dragged equity markets from their recent peak, and benchmark 10-year Treasury yields from their four-month high set earlier this week.
Ten-year note's yield <US10YT=RR>, which moves inversely to its price, last traded at 3.75 percent, down from 3.78 percent late on Thursday. It briefly moved above 3.95 percent just two days ago.
Major U.S. stock indexes were down as much as 0.8 percent following a 2 percent drop in Tokyo and a 1 percent fall in Europe. See [.N]
Another positive factor for Treasuries was the roughly $70 billion investors received on maturing U.S. government bonds from the Treasury quarterly refunding this week.
Investors plowed back some of this record amount of cash into Treasuries in anticipation of seasonally strong performance after the May refunding, analysts said.
Bonds' gains were mitigated by a bigger-than-expected narrowing in the March trade deficit, boosting the prospects of an upward government revision on first-quarter gross domestic product, analysts said.
A stronger first-quarter GDP reading will support the view that the U.S. economy would avoid a recession and alleviate pressure on the Federal Reserve to trim short-term interest rates further, analysts said.
The Treasuries market also traded off its initial highs on some reassuring comments from Citigroup's <C.N> new chief executive, Vikram Pandit, after the largest U.S. bank unveiled a plan to sell $400 billion of assets in a bid to become more efficient and profitable. [ID:nN09468753]
Citi has suffered hefty losses from the subprime crisis and its fallout.
"Pandit is selling his program well. People are a little less fearful and they are taking some profits on bonds," said Andrew Brenner, senior vice president at MF Global in New York, said of the Citi's CEO remarks in conference call with analysts and investors.
Still, there are plenty of downside risks to the economy, including persistent bottlenecks in the credit markets and a relentless surge in oil which hit a series of record highs this week. U.S. crude <CLc1> broke above $126 a barrel on Friday.
Among other cash maturities, two-year notes <US2YT=RR> were up 2/32 in price for a 2.20 percent yield, down from 2.23 percent late Thursday. Two-year yield fell for a fifth straight session and poised for its biggest weekly drop since March.
Five-year debt <US5YT=RR> was up 4/32 in price for a 2.95 percent yield, down from 2.98 percent late on Thursday.
Thirty-year bonds <US30YT=RR>, after Thursday's well-bid reopening, traded up 20/32 for a yield of 4.51 percent versus 4.55 percent late Thursday. (Additional reporting by Burton Frierson; Editing by Tom Hals)
((richard.leong@thomsonreuters.com ; +1 646 223 6313; Reuters Messaging: richard.leong.reuters.com@reuters.net )) Keywords: MARKETS BONDS
-------MARKET SNAPSHOT AT 11:43 a.m. EDT (1543 GMT)-------
June T-Bond <USM8> 117-13/32 (+21/32)
June 10-Year note <TYM8> 116-06/32 (+12/32)
Change vs Current
Nyk yield
Three-month bills<US3MT=RR> 1.645 (+0.02) 1.679
Six-month bills <US6MT=RR> 1.715 (+0.04) 1.754
Two-year note <US2YT=RR> 99-27/32 (+01/32) 2.215
Five-year note <US5YT=RR> 100-26/32 (+04/32) 2.951
10-year note <US10YT=RR> 100-32/32 (+07/32) 3.756
30-year bond <US30YT=RR> 97-26/32 (+18/32) 4.510
Keywords: MARKETS BONDS
UPDATE 1-Serb dinar down, shares up as markets await polls
Reuters: [2008-05-09 17:59:00]
(Updates with cbank comments, detail, bourse)
By Gordana Filipovic
BELGRADE, May 9 (Reuters) - Serbia's dinar fell to a five-month low on Friday in jittery interbank trade despite central bank euro selling, while speculative buying lifted the long-depressed bourse to a five-week high.
The central bank said its euro selling did little in a market worried about the Sunday general election, which could bring nationalists to power for the first time in eight years.
"One can say for certain that the dinar movements have nothing to do with economic fundamentals, which determine the rate in the long-run," vice-governor Diana Dragutinovic told Blic daily in a statement due to be published on Saturday.
It has been rather "psychologically driven", she added.
Including Friday's decline, the dinar <EURRSD=> has lost some 6 percent so far this year.
Despite the bank's attempts to curb losses by selling 5.0 million euros, it traded at 84.30/84.40 to the euro at 1422 GMT, down from 83.52 where it opened. The bank has sold 38 million euros this week alone trying to curb losses.
The dinar has been under the managed float regime since 2002, but the central bank has never spelled out the floating band. The limits are assumed to be 76.5 and 85.0/euro.
Polls show the ballot will be a tight race between the nationalist, populist Radical Party and a coalition of liberal parties that want Serbia to pursue European Union membership.
The Radicals are seen having a slight edge and would likely have the first go at forming a coalition with smaller parties.
Dragutinovic said that even though Serbia's macroeconomic fundamentals were mostly sound and yields on the dinar high, investors appeared reluctant.
The bank was monitoring the dinar and deciding the volume of its presence in interbank market on the currency's cumulative trend and its estimated impact on core inflation, she added.
"Considering the forex market movements...the central bank will reconsider monetary policy stance in the context of the goals at May 15 board meeting," she said.
The bank last raised its benchmark, 2-week repo rate by 75 basis points to 15.25 percent in April to bring core inflation down from 8 percent into its 3-6 percent targeted band.
Sidelined during the rule of autocrat Slobodan Milosevic in the 1990s, the bank has worked hard since he was ousted in 2000 to stabilise the dinar and cut inflation to single digits.
It has sold over 250 million euros this year through covert interventions to add liquidity to the interbank market, where banks are often reluctant to trade among themselves.
Unlike the more conservative forex market, the Belgrade bourse posted its second biggest daily index increase this year.
"Today's buying activity came from smaller domestic investors," one broker said. "It's a pure speculation, somebody decided to take a chance. The risk is high and rewards could be enormous if the pro-Western bloc wins," one broker said.
(Reporting by Gordana Filipovic; Editing by Ellie Tzortzi) ((gordana.filipovic@thomsonreuters.com, +381 11 311 4254; Reuters Messaging: gordana.filipovic.reuters.com@reuters.net))
Keywords: MARKETS SERBIA/
Next: UPDATE 1-Serb dinar down, shares up as markets await polls