Canada's dollar pulled back for the first time in five days as U.S. unemployment claims achieved the worst point since 2006 last week, surging bets the Federal Reserve will slow asset purchases at its policy meeting next week.
The currency deletes advances after earlier reaching an almost four-week high against its U.S. counterpart as fewer Americans than forecast filing for unemployment benefits lifted the case for the U.S. central bank to trim down the quantitative-easing program some consider negative for the U.S. dollar. The Fed meets Sept. 17-18. The data followed a U.S. payrolls report last week that showed slower-than-forecast August job development, while Canada added positions at three times calculations.
Bonds, Oil
Canada’s benchmark 10-year government bonds were slightly altered , yielding 2.78 percent. The 1.5 percent security maturing in June 2023 traded at C$89.18.
‘Slightly Hawkish’
The loonie strengthened earlier after the Reserve Bank of New Zealand said interest-rate increases “will likely be required next year” as the economy strengthens and inflation picks up, spurring bets Canada will follow its commodity-exporting peer’s lead.
New Zealand’s dollar, or kiwi, traded higher versus all 31 of its most-traded rivals, obtaining 0.7 percent to 81.38 U.S. cents.
“The RBNZ was interesting yesterday because they certainly shifted from a slightly hawkish bias to a fully hawkish bias, suggesting they’ll hike rates next year,” Camilla Sutton, head of currency strategy at Bank of Nova Scotia (BNS), said by phone from Toronto. “The performance of the New Zealand dollar is interesting in relation to Canada, as at some point the Bank of Canada will likely make a similar shift.”
The loonie has slumped 0.6 percent in the past month versus nine developed nation currencies tracked by the Bloomberg Correlation Weighted Index. The only currencies to soar in that period were the Australian dollar, the British pound and the kiwi. The U.S. dollar gave up 0.7 percent.
