June 1, 2018 / 2:15 PM / 6 months ago

CANADA FX DEBT-C$ flat as manufacturing growth offsets trade risk

    * Canadian dollar at C$1.2961, or 77.15 U.S. cents
    * Price of U.S. oil falls 1.2 percent
    * Bond prices lower across the yield curve

    TORONTO, June 1 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday as data showing
acceleration in domestic manufacturing growth offset lower oil
prices and the prospect of an escalating trade quarrel.
    Growth in the Canadian manufacturing sector accelerated in
May to its fastest pace in more than seven years as new orders
and inventories climbed. The IHS Markit Canada Manufacturing
Purchasing Managers' Index rose to a seasonally-adjusted 56.2
last month from 55.5 in April.             
    U.S. crude oil futures        were down 1.2 percent at
$66.24 a barrel as U.S. oil output comes close to matching that
of top producer Russia. Oil is one of Canada's major exports.
            
    U.S. President Donald Trump fired back at Canada after
Ottawa and other American allies retaliated against Washington's
steel and aluminum tariffs, and appeared to threaten possible
action against Canada's lumber industry.             
    At 9:53 a.m. EDT (1353 GMT), the Canadian dollar         
was nearly unchanged at C$1.2961 to the greenback, or 77.15 U.S.
cents. The currency traded in a range of C$1.2931 to C$1.3009.
    For the week, the loonie is on track to rise 0.1 percent. It
was boosted on Wednesday by a more hawkish than expected policy
statement from the Bank of Canada, which increased chances of an
interest rate hike as soon as July.           
    But the currency lost ground on Thursday after data showed
weaker-than-expected growth in the domestic economy and the U.S.
imposed tariffs.                         
    The U.S. dollar        climbed on Friday against a basket of
major currencies, helped by data showing U.S. job growth
accelerated in May and the unemployment rate dropped to an
18-year low of 3.8 percent.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
fell 11 Canadian cents to yield 2.258 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 7 basis points to a spread of -64.6 basis
points.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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