Thursday, 7 June 2012

Canadian Dollar Ends Flat, Cedes Early Gains on Bernanke Comments

The Canadian dollar rose to its highest level since May 29 in morning trading Thursday but then ceded its gains to end flat after congressional testimony from Federal Reserve Chairman Ben Bernanke fell short of explicitly signaling a new round of monetary easing.
The U.S. dollar was at C$1.0281 late Thursday and C$1.0276 late Wednesday, according to data provider CQG. It dropped to a low of C$1.0206 before rebounding after Mr. Bernanke's remarks at 10:00 a.m. EDT (1400 GMT).
Appearing before the Joint Economic Committee, Mr. Bernanke suggested that questions about the needs, and effectiveness, of more Fed stimulus for the economy remain very much unresolved.
Some market players had positioned themselves for a more definite signal about the potential for more monetary stimulus in the chairman's remarks, and risk-sensitive assets such as the Canadian dollar sold off afterwards as a result.
"The market's all about immediacy, and I think there was some faint hope one might see something earlier rather than later on that front," said Shane Enright, executive director, capital markets trading at CIBC World Markets.
"I think the reality is that Bernanke is always going to be offering a slightly more balanced view," he said.
Crude oil futures retreated after an initial boost from news of a rate cut in China, a development that also pressured the Canadian dollar, Mr. Enright said.
The C$1.0200 area will provide initial support for the U.S. dollar, and sellers will likely return on a move to the C$1.0300-25 area, he said.
On Friday, Canadian jobs data for May will be released. Economists believe the Canadian economy created 5,000 jobs in May after adding 58,200 in the previous month.
These are the exchange rates at 4:23 p.m. EDT (2023 GMT) and 8:00 a.m. EDT (1200 GMT) Thursday, and late Wednesday.

Canadian Bonds Decline for 4th Day As Sentiment Continues to Lift

Canadian bonds moved lower as an absence of negative news out of Europe and a wave of constructive economic data helped to convince investors to step aside from the safety of fixed income for a fourth-straight session.
Yields for Canada's two-year bond were at 1.069% late Thursday, from 1.054% late Wednesday. The 10-year bond was yielding 1.842%, from 1.803%, according to electronic trading platform CanDeal.
Yields for the 30-year bond were at 2.387% Thursday, from 2.350% late Wednesday.
Bond yields move inversely to bond prices.
After moving to record-low yields last week as heightened worries across Europe led to a broad flight to safety, bonds continued to decline, shrugging off a positive read of Canada's Ivey purchasing managers index and U.S. labor data.
Canadian bonds followed their U.S. counterparts with small gains after Federal Reserve Chairman Ben Bernanke provided testimony to Congress that failed to provide signs that further monetary stimulus would be injected into the financial system.
Those gains were short-lived and bonds registered a decline across the board. Issuance of Canadian provincial bonds that yielded more than their government counterparts also contributed to the sell-off, said Andrew Kelvin, senior fixed income strategist at TD Securities in Toronto.
"I would still characterize this bond market as being positioned defensively," Mr. Kelvin said.
He added that traders weren't taking positions ahead of Canadian labor data that will be released Friday morning, noting that the front-end of the curve would have seen more movement if investors were worried about domestic employment figures.
Canada is expected to report a gain of only 5,000 jobs in May.

National Bank Vancouver Mgr From HSBC Leaves

Ronald Walchuk has replaced Peter Evanoff as regional manager in Vancouver, British Columbia, for National Bank of Canada (NA.T), according to people familiar with the situation.
Mr. Walchuk currently oversees the bank's Victoria, B.C., branch and will continue in that role as well as assuming responsibility for National Bank's larger Vancouver region.
A spokeswoman declined to comment. Mr. Evanoff wasn't immediately reachable for comment, and Mr. Walchuk didn't immediately return a call seeking comment.
The departure comes in the wake of last year's purchase by National Bank of HSBC's Canadian retail-brokerage unit. Mr. Evanoff formerly worked for HSBC as the Vancouver chief. His exit follows the recent departure of another onetime HSBC manager Mike Miller, the former national sales manager for Ontario and the Atlantic region, who left in March.