November 8, 2018 / 8:55 PM / 7 days ago

CANADA FX DEBT-C$ hits 8-week low as Fed affirms rate hike policy

 (Adds investor quote, updates throughout)
    * Canadian dollar slips 0.4 percent against the greenback
    * Price of U.S. oil falls 1.6 percent
    * Bond prices trade mixed across the yield curve
    * Canada-U.S. 5-year spread widens by 3.1 basis points

    By Fergal Smith
    TORONTO, Nov 8 (Reuters) - The Canadian dollar weakened to
an eight-week low against its broadly stronger U.S. counterpart
on Thursday as oil prices fell and the Federal Reserve left
intact its plans to gradually raise interest rates.
    The Fed said ongoing strong job gains and household spending
had kept the economy on track, but it did not explicitly take
stock of recent volatility in U.S. equity markets.             
    "It didn't raise rates today but it seems like they are
still on the path to higher rates ... which causes the loonie to
decline a little bit," said Hosen Marjaee, senior managing
director, Canadian fixed income at Manulife Asset Management.
    Higher U.S. interest rates could reduce investor incentive
to buy lower-yielding Canadian bonds. The gap between Canada's
5-year yield and its U.S. equivalent widened by 3.1 basis points
to a spread of 63.5 basis points in favor of the U.S. bond.     
  
    The U.S. dollar        climbed against a basket of major
currencies, while U.S. crude oil futures        settled 1.6
percent lower at $60.67 a barrel as investors focused on
swelling global crude supply.             .
    Oil is one of Canada's major exports.
    At 3:30 p.m. (2030 GMT), the Canadian dollar          was
trading 0.4 percent lower at 1.3163 to the greenback, or 75.97
U.S. cents. The currency touched its weakest level since Sept.
10 at 1.3183.
    Canadian housing starts rose in October to a seasonally
adjusted annual rate of 205,925 units from September's upwardly
revised 189,730 units. Economists had expected starts to rise to
200,000.             
    In separate data, new home prices in Canada were unchanged
in September for the second month in a row, Statistics Canada
said.             
    Canadian government bond prices were mixed across a slightly
flatter yield curve. The 10-year             rose 1 Canadian
cent to yield 2.537 percent.   

 (Reporting by Fergal Smith; Editing by Richard Chang)
  
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