April 12, 2019 / 1:44 PM / 5 months ago

CANADA FX DEBT-C$ gains on higher oil prices, China economy hopes

    * Canadian dollar rises 0.5% against the greenback
    * Price of U.S. oil increases 1.1%
    * Loonie is on track to climb 0.5% for the week
    * Canadian bond prices fall across a steeper yield curve

    TORONTO, April 12 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday and was on
track to end higher for the week as oil prices rose and data
showed signs of stabilization in China's economy.
    China's exports rebounded in March but imports shrank for a
fourth straight month and at a sharper pace, painting a mixed
picture of the economy as trade talks with the United States
reach their endgame.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade and growth.
    Oil prices rose on Friday as involuntary supply cuts from
Venezuela, Libya and Iran supported perceptions of a tightening
market, already underpinned by a production reduction deal from
OPEC and its allies. U.S. crude oil futures        were up 1.1%
at $64.27 a barrel.      
    At 9:26 a.m. (1326 GMT), the Canadian dollar          was
trading 0.5% higher at 1.3320 to the greenback, or 75.08 U.S.
cents. The currency, which was also up 0.5% for the week, traded
in a range of 1.3313 to 1.3386.
    The loonie made ground despite data showing Canadian home
prices fell in March for the sixth straight month.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year fell
6.8 Canadian cents to yield 1.625% and the 10-year            
was down 42 Canadian cents to yield 1.77%.
    Ontario, Canada's most populous province and industrial
powerhouse, projected a smaller budget deficit in the current
fiscal year and a return to balance by 2023-24 as it disclosed
plans to reverse the growth in spending.             
    The gap between the yield on the province's 10-year bonds
and the equivalent federal government bond has narrowed by 3
basis points since Wednesday to 70.5 basis points.

 (Reporting by Fergal Smith
Editing by Susan Thomas)
  
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