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Record Bond Purchases in Canada Pushes Investment to $20.8 Billion

Record Bond Purchases in Canada Pushes Investment to $20.8 Billion

Dylan Jusino, Contributor

Talking Points:

- Foreign investment in Canadian securities rose sharply in October at $20.8 billion versus $16.7 billion in September

- Foreign investors flocked to US shares and private Canadian corporate debt

- Record outflows reported in money market securities

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Statistics Canada reported that foreign investment in Canadian securities came in at $20.8 billion for the month of October. The spike over the previous month at $16.69 billion (revised down from $16.81 billion) was largely due to record acquisitions of Canadian bonds. Foreign investors also acquired equities, to a lesser extent, and reduced exposure in money market securities. At the same time Canadian investors increased their holdings of foreign securities by $16.5 billion through US equity purchases. Here’s a brief overview of security purchases:

  • Non-resident Canadian bond inflows – $27.9 billion (record high)
  • Non-resident Federal govt bond inflows – $6.0 billion
  • Canadian money market outflows – $8.8 billion (record high)
  • Foreign Canadian equity inflows – $1.7 billion
  • Foreign Canadian equity outflows - $2.9 billion

Year to date, foreign purchases of Canadian securities have totaled $171.0 billion. Around 75% of these purchases are attributed to issuances of Canadian private corporate-debt denominated in foreign currencies. Statistics Canada commented, “foreign investment in Canadian private corporate bonds has been significant in recent years, as these firms were actively raising funds abroad through the issuance of bonds, in the context of continued low interest rates.”

Chart 1: USDCAD 15-minute Chart (December 17 - 18, 2017)

The securities transactions in Canada underwhelmed traders as shown by the muted response in USDCAD. The Canadian Dollar weakened about 10 pips against the US Dollar before retraced to the pre-data level of 1.2874.

--- Written by Dylan Jusino, DailyFX Research

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.