December 18, 2017 / 9:48 PM / 10 months ago

CANADA FX DEBT-C$ barely stronger ahead of busy week of domestic data

    * Canadian dollar at C$1.2863, or 77.74 U.S. cents
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, Dec 18 (Reuters) - The Canadian dollar barely
gained against a broadly weaker U.S. counterpart on Monday,
trading in a narrow range ahead of domestic data later in the
week that could help guide expectations for the interest rate
outlook.
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading at C$1.2863 to the greenback, or 77.74 U.S. cents. The
currency traded in a range of C$1.2843 to C$1.2881.
    Wholesale trade data for October is due on Wednesday while
Canada's inflation report for November and October retail sales
data are expected on Thursday, and gross domestic product data
for October is due on Friday.
    "This is a pretty heavy week in terms of data," said Bipan
Rai, director of foreign exchange strategy at CIBC Capital
Markets. "There's a lot there that could drive direction in the
near term." 
    The loonie dipped 0.1 percent last week after being
pressured on Friday by weaker-than-expected domestic
manufacturing data.
    The currency also fluctuated last week on remarks by Bank of
Canada Governor Stephen Poloz.
    Poloz said he worried about the potential to slip into a
"deflationary scenario" if interest rates are raised too fast to
deal with financial imbalances in an interview with the Globe
and Mail published on Saturday.
    Still, the central bank is leaving the door open to further
rate hikes in early 2018, making clear a number of uncertainties
that could derail the economy, such as North American Free Trade
Agreement (NAFTA) renegotiation, are reason for caution but not
inaction.             
    NAFTA negotiators made some progress on less controversial
issues last week but left untouched the thorniest subjects of
autos, dispute settlement and an expiry clause to be tackled at
pivotal talks in January in Montreal.             
    "Is there room for optimism going forward, or is it going to
be as contentious as it was in October?" Rai said, adding that
further signs of disagreement could push the loonie out of its
recent range.
    Foreign investment in Canadian securities accelerated in
October, driven by a record purchase of bonds, data from
Statistics Canada showed.                 
    The U.S. dollar        dipped against a basket of major
currencies as concerns grew over whether a proposed U.S. tax
overhaul program would have a major impact on economic growth.
            
    Canadian government bond prices were lower across the yield 
curve, with the two-year            down 4 Canadian cents to
yield 1.572 percent and the 10-year             falling 20
Canadian cents to yield 1.86 percent.

 (Reporting by Fergal Smith and Alastair Sharp; Editing by
Jonathan Oatis and Matthew Lewis)
  
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