October 30, 2018 / 8:25 PM / 13 days ago

CANADA FX DEBT-C$ firms as stocks climb, Poloz sticks to rate-hike message

 (New throughout)
    * Canadian dollar rises 0.1 percent against the greenback
    * Bank of Canada's Poloz says more rate hikes will be needed
    * U.S. oil prices fall 1.3 percent
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, Oct 30 (Reuters) - The Canadian dollar edged higher
against its broadly stronger U.S. counterpart on Tuesday,
boosted by gains for stocks and as Bank of Canada Governor
Stephen Poloz repeated that more interest rates hikes will be
needed to keep inflation in check.    
    Monetary policy in Canada is still stimulative despite an
increase in interest rates last week, Poloz told legislators.
            
    Last week, the central bank hiked its key interest rate by
25 basis points to 1.75 percent, its fifth increase since July
2017. Money markets expect another hike as soon as January.
          
    Major U.S. stock indexes climbed, helped by gains for chip
stocks as investors took advantage of cheaper prices following a
steep recent pullback for equities.             
    "USD-CAD is trading tick for tick with developments in
equity markets," said Mazen Issa, senior FX strategist at TD
Securities.
    As one of the higher yield currencies in the G10, the
Canadian dollar tends to be vulnerable to swings in risk
sentiment, Issa said.
    The U.S. dollar        rose to a 16-month high against a
basket of major currencies amid growing signs the United States
economy is outperforming its peers.             
    At 4:00 p.m. (2000 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3121 to the greenback, or 76.21
U.S. cents.
    The currency, which on Friday touched 1.3160, its strongest
level in more than six weeks, traded in a range of 1.3102 to
1.3147.
    The price of oil, one of Canada's major exports, was
pressured by rising supply and concern that global economic
growth and demand for fuel will fall victim to the U.S.-China
trade war.             
    U.S. crude oil futures        settled 1.3 percent lower at
$66.18 a barrel.    
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 9 Canadian cents to yield 2.309 percent and the 10-year
            declined 41 Canadian cents to yield 2.445 percent.
    Canada's gross domestic product data for August is due on
Wednesday.

 (Reporting by Fergal Smith; Editing by David Gregorio and James
Dalgleish)
  
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