June 18, 2018 / 9:24 PM / 3 months ago

CANADA FX DEBT-C$ hits near one-year low amid rising trade tensions

    * Canadian dollar at C$1.3200, or 75.76 U.S. cents
    * Loonie touches near one-year low at C$1.3237
    * U.S. crude oil price rises 1.2 percent
    * Bond prices higher across much of the yield curve

    By Fergal Smith
    TORONTO, June 18 (Reuters) - The Canadian dollar weakened to
a nearly one-year low against its U.S. counterpart on Monday
before paring some of its losses, as global trade tensions
weighed on stocks and investors worried about Canada's trade
feud with the United States.
    At 5 p.m. EDT (2100 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.3200 to the greenback, or 75.76
U.S. cents. The currency touched its weakest level since June
27, 2017 at C$1.3237.
    "It is a continuation of what is a pretty bad story for CAD
overall," said Mazen Issa, senior FX strategist at TD
Securities. "We've been sliding further down into the rabbit
hole on the trade front."
    The loonie has been pressured recently by new U.S. tariffs
on steel and aluminum imports as well as slow-moving talks to
modernize the North American Free Trade Agreement.
    Canada runs a current account deficit so its currency could
also be hurt by souring of risk appetite.
    Stocks on Wall Street slipped as investors eyed an
escalating trade dispute between the United States and China
while oil prices rose on bets that an OPEC production increase
would be smaller than expected.             
    U.S. crude oil futures        settled 1.2 percent higher at
$65.85 a barrel. Oil is one of Canada's major exports.
    Canadian government bond prices were higher across much of
the yield curve. The two-year            rose 3.5 Canadian cents
to yield 1.873 percent and the 10-year             climbed 14
Canadian cents to yield 2.202 percent.
    A working group will present recommendations on enhancements
to the Canadian overnight risk-free rate by the end of the year,
and the Bank of Canada will seek broader input on interest rate
benchmark reform, Deputy Governor Lynn Patterson said.
            
    Canadian inflation data for May and the April retail sales
report are due on Friday.

 (Reporting by Fergal Smith
Editing by James Dalgleish)
  
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