September 30, 2019 / 9:38 PM / 2 months ago

CANADA FX DEBT-Canada's dollar, the 'second cleanest shirt,' rises in September

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar trades in a range of 1.3225 to 1.3260
    * Loonie rises 0.5% in September
    * Price of U.S. oil decreases 3.3%
    * Canadian bond prices dip across much of the yield curve

    By Fergal Smith
    TORONTO, Sept 30 (Reuters) - The Canadian dollar was little
changed against a broadly stronger U.S. counterpart on Monday,
with the currency holding on to its gains for the month after it
had been supported by the Bank of Canada's divergence from other
central banks.
    At 4:22 p.m. (2022 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3243 to the greenback, or 75.51
U.S. cents, faring better than other G10 currencies with the
exception of sterling.
    The range for the loonie was 1.3225 to 1.3260. For the
month, it was up 0.5%.
    "It is the second cleanest shirt in the dirty laundry basket
after the U.S.," said Christian Lawrence, senior market
strategist at Rabobank. "The Bank of Canada is resisting rate
cuts for now while everyone else is talking about more easing."
   A steady policy stance from the Bank of Canada this year has
been supported by a robust domestic jobs market and an inflation
rate that has hovered around the central bank's 2% target. Other
central banks, including the U.S. Federal Reserve have eased.
    Relative strength for the loonie on Monday came as Canadian
Prime Minister Justin Trudeau's Liberal Party promised billions
of dollars of new spending in a campaign platform ahead of next
month's federal vote.             
    Deficits add to a country's debt load but could also boost
economic growth. Some experts see wiggle room for a larger
budget shortfall so long as the economy continues to grow.
            
    Producer prices in Canada rose by 0.2% in August from July
on higher prices for pork products, as well as precious metals,
Statistics Canada said.                      
    Canada's gross domestic product data for July is due on
Tuesday.
    The U.S. dollar        climbed on Monday against a basket of
major currencies, benefiting from seasonal demand and
uncertainty arising from the U.S.-China trade war.             
    The price of oil, one of Canada's major exports, fell on
fading concerns of supply shortfalls and conflicts in the Middle
East after the Sept. 14 attack on Saudi Arabia. U.S. crude oil
futures        settled 3.3% lower at $54.07 a barrel.
                
    Canadian government bond prices edged lower across much of
the yield curve, with the two-year            down 1.5 Canadian
cents to yield 1.583% and the 10-year             falling 7
Canadian cents to yield 1.366%.   

 (Reporting by Fergal Smith
Editing by Alistair Bell and Sandra Maler)
  
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