CANADA FX DEBT-C$ hits 4-week low; analysts suspect M&A flows

BY Reuters | ECONOMIC | 11/29/22 03:40 PM EST

(Adds analyst quotes and details throughout; updates prices)


Canadian dollar falls 0.7% against the greenback


Touches its weakest since Nov. 4 at 1.3645


Canada's third-quarter GDP increases 2.9%


Canadian bond yields rise across curve

By Fergal Smith

TORONTO, Nov 29 (Reuters) - The Canadian dollar fell to its lowest level in nearly four weeks against the greenback on Tuesday, a move that analysts said was likely transaction-driven and despite data showing that Canada's economy grew faster-than-expected in the third quarter.

The loonie was trading 0.7% lower at 1.3589 to the greenback, or 73.59 U.S. cents, the biggest decline among G10 currencies. It touched its weakest level since Nov. 4 at 1.3645.

"The Canadian dollar was inexplicably weak today," said Adam Button, chief currency analyst at ForexLive. "I assume a large corporate or possibly M&A deal was going through the market."

The move coincided with HSBC (HSBC) agreeing to sell its business in Canada to Royal Bank of Canada (RY) for C$13.5 billion ($10 billion) in cash.

Canada's economy grew at an annualized rate of 2.9% in the third quarter, above analysts' expectations, driven by exports and non-residential structures, Statistics Canada data showed.

The details were less bullish, with final domestic demand falling 0.6%, while a preliminary estimate showed that October's GDP was unchanged after the economy grew by 0.1% in September compared to August.

Money markets continued to expect a 25 basis point interest rate hike by the Bank of Canada at a policy decision next week, while seeing a 25% chance of a larger move.

The price of oil, one of Canada's major exports, rose on hopes for a relaxation of China's strict COVID-19 controls. U.S. crude prices settled 1.2% higher at $78.20 a barrel.

Canadian government bond yields were higher across the curve, with the 10-year up 5.5 basis points at 2.998%. (Reporting by Fergal Smith; Editing by Bernadette Baum and Grant McCool)

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