June 6, 2018 / 1:28 PM / 4 months ago

CANADA FX DEBT-C$ near 1-week high as trade deficit shrinks

    * Canadian dollar at C$1.2880, or 77.64 U.S. cents
    * Canada's trade deficit shrinks to 6-month low
    * Bond prices lower across the yield curve

    TORONTO, June 6 (Reuters) - The Canadian dollar strengthened
to a near one-week high against its U.S. counterpart on
Wednesday as the greenback broadly fell and domestic data showed
a narrower-than-expected trade deficit.
    Canada's trade deficit in April shrank to a six-month low of
C$1.90 billion from C$3.93 billion in March, as exports climbed
to a record high and imports dropped, Statistics Canada said.
The shortfall was considerably less than the C$3.40 billion
deficit forecast by analysts.             
    The U.S. dollar fell against a basket of major currencies
after officials said the European Central Bank could wind down
its stimulus program by end-2018, boosting the euro.
            
    At 9:05 a.m. EDT (1305 GMT), the Canadian dollar         
was trading 0.7 percent higher at C$1.2880 to the greenback, or
77.64 U.S. cents. The currency touched its strongest level since
May 31 at C$1.2857.
    The loonie was pressured on Tuesday by the prospect of U.S.
President Donald Trump moving toward bilateral discussions on
trade with Canada and Mexico.             
    On Wednesday, signs of easing trade tensions between the
U.S. and China helped boost stocks.                             
    The price of oil, one of Canada's major exports, fell even
after Venezuela raised the prospect of a halt to some crude
exports.             
    U.S. crude        prices were down 0.6 percent at $65.16 a
barrel.        
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries and German Bunds. The
two-year            fell 5.5 Canadian cents to yield 1.947
percent and the 10-year             declined 37 Canadian cents
to yield 2.295 percent.
    In separate data, the value of Canadian building permits
fell by 4.6 percent in April from March, the biggest decline in
five months.             
    Canada's employment report for May is due on Friday.  

    
 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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