As my readers are well aware I've been bullish on the Canadian dollar since the beginning of the year.
This has nothing to do with me being Canadian other than the fact I did a lot of research several years back on the strength of Canadian banks which among the strongest if not the strongest banks in the world.
Remember that Canada is one of the largest natural resources suppliers in the world and has the third largest oil reserves in the world.
Therefore the Canadian dollar is often tied to the value of Crude oil which of course has dropped from around $150 A barrel down to lows around $40 per barrel and is now back in the 60s.
I firmly believe that this year is the start of a major rally in the Canadian dollar especially the United States dollar and the Australian dollar.
As both to the United States and Australia go further and further in debt the Canadian loonie will shine.
It is starting off the year on a very positive note.
In the short term the fact the country with the largest oil reserves in the world Venezuela is going through what may be a Civil War.
They have hyperinflation and now the United States has restricted the purchase of their oil unless the money is kept in reserve and not given to the current president that they do not support.
This is very negative for oil and could cause a huge rise in oil prices the next couple weeks and months.
Simultaneously it should cause a huge rise the Canadian dollar against USD and Australian.
CANADA FX DEBT-C$ rises to 3-month high as oil rallies, yield spreads narrow
Fergal Smith
(New throughout, updates prices, market activity and comments) * Canadian dollar rises 0.3 percent against the greenback * Loonie touches its strongest since Nov. 7 at 1.3069 * Price of U.S. oil rises 2.7 percent * Canadian bond prices fall across the yield curve * Canada-U.S. 10-year spread narrows by 2.6 basis points By Fergal Smith TORONTO, Feb 1 (Reuters) -
The Canadian dollar strengthened on Friday to its highest in nearly three months against the greenback as oil prices rose and as the gap narrowed between Canadian and U.S. bond yields despite U.S. data showing employers hired the most workers in 11 months. At 4:31 p.m. (2131 GMT), the Canadian dollar was trading 0.3 percent higher at 1.3088 to the greenback, or 76.41 U.S. cents.
The currency, which climbed 3.9 percent in January, touched its strongest level intraday since Nov. 7 at 1.3069. For the week, the loonie rose 1 percent. The "big drivers" for the Canadian dollar have been narrower yield spreads and higher oil prices, said Amo Sahota, a director at Klarity FX in San Francisco. U.S. crude oil futures settled 2.7 percent higher on Friday, helped by upbeat U.S. jobs data and signs that U.S. sanctions on Venezuelan exports have helped tighten supply. U.S. job growth surged in January, pointing to strength in the economy. Still, other data hinting at a darkening outlook have the Federal Reserve cautious about further interest rate hikes this year.
The spread between Canada's 10-year yield and its U.S. equivalent narrowed on Friday by 2.6 basis points to a spread of 73 basis points in favor of the U.S. bond, its narrowest since Jan. 7. The narrower spread came as hopes rose of progress on trade talks between the United States and China. The U.S.-China trade talks this week had a "good vibe" with much work remaining, White House economic adviser Larry Kudlow said on Friday as China followed through on a pledge to increase soybean purchases with a 1 million tonne order. Canada is running a current account deficit as well as being a major commodities producer, so its economy could benefit from a pickup in the global flow of trade. Data from the U.S. Commodity Futures Trading Commission, which had been delayed during a partial shutdown of the U.S. government, and Reuters calculations showed that speculators raised their bearish bets on the Canadian dollar in December to the highest in about five months.
As of Dec. 24, net short positions had jumped to 44,692 contracts from 7,457 a week earlier. Canadian government bond prices were lower across the yield curve, with the two-year down 11.5 Canadian cents to yield 1.833 percent and the 10-year falling 69 Canadian cents to yield 1.960 percent. (Reporting by Fergal Smith Editing by Phil Berlowitz and David Gregorio)
Fergal Smith
(New throughout, updates prices, market activity and comments) * Canadian dollar rises 0.3 percent against the greenback * Loonie touches its strongest since Nov. 7 at 1.3069 * Price of U.S. oil rises 2.7 percent * Canadian bond prices fall across the yield curve * Canada-U.S. 10-year spread narrows by 2.6 basis points By Fergal Smith TORONTO, Feb 1 (Reuters) -
The Canadian dollar strengthened on Friday to its highest in nearly three months against the greenback as oil prices rose and as the gap narrowed between Canadian and U.S. bond yields despite U.S. data showing employers hired the most workers in 11 months. At 4:31 p.m. (2131 GMT), the Canadian dollar was trading 0.3 percent higher at 1.3088 to the greenback, or 76.41 U.S. cents.
The currency, which climbed 3.9 percent in January, touched its strongest level intraday since Nov. 7 at 1.3069. For the week, the loonie rose 1 percent. The "big drivers" for the Canadian dollar have been narrower yield spreads and higher oil prices, said Amo Sahota, a director at Klarity FX in San Francisco. U.S. crude oil futures settled 2.7 percent higher on Friday, helped by upbeat U.S. jobs data and signs that U.S. sanctions on Venezuelan exports have helped tighten supply. U.S. job growth surged in January, pointing to strength in the economy. Still, other data hinting at a darkening outlook have the Federal Reserve cautious about further interest rate hikes this year.
The spread between Canada's 10-year yield and its U.S. equivalent narrowed on Friday by 2.6 basis points to a spread of 73 basis points in favor of the U.S. bond, its narrowest since Jan. 7. The narrower spread came as hopes rose of progress on trade talks between the United States and China. The U.S.-China trade talks this week had a "good vibe" with much work remaining, White House economic adviser Larry Kudlow said on Friday as China followed through on a pledge to increase soybean purchases with a 1 million tonne order. Canada is running a current account deficit as well as being a major commodities producer, so its economy could benefit from a pickup in the global flow of trade. Data from the U.S. Commodity Futures Trading Commission, which had been delayed during a partial shutdown of the U.S. government, and Reuters calculations showed that speculators raised their bearish bets on the Canadian dollar in December to the highest in about five months.
As of Dec. 24, net short positions had jumped to 44,692 contracts from 7,457 a week earlier. Canadian government bond prices were lower across the yield curve, with the two-year down 11.5 Canadian cents to yield 1.833 percent and the 10-year falling 69 Canadian cents to yield 1.960 percent. (Reporting by Fergal Smith Editing by Phil Berlowitz and David Gregorio)
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