November 1, 2018 / 9:19 PM / 15 days ago

CANADA FX DEBT-C$ rebounds but lags most G10 currencies ahead of jobs report

 (Recasts throughout)
    * Canadian dollar rises 0.5 percent against the greenback
    * Canada manufacturing growth slows to 21-month low in
October
    * Price of U.S. oil falls 2.5 percent
    * Bond prices trade higher across the yield curve

    By Fergal Smith
    TORONTO, Nov 1 (Reuters) - The Canadian dollar rallied
against the greenback on Thursday, rebounding from a seven-week
low the day before, but it underperformed many other G10
currencies as oil prices tumbled ahead of the release of
domestic jobs data on Friday.
    At 4:34 p.m. (2034 GMT), the Canadian dollar          was
trading 0.5 percent higher at 1.3093 to the greenback, or 76.38
U.S. cents. On Wednesday, the loonie touched 1.3170, its weakest
in more than seven weeks.
    Still, other G10 currencies, with the exception of the
safe-haven yen, posted bigger gains as risk appetite recovered
at the start of the month and the U.S. dollar retreated sharply
from a 16-month high hit on Wednesday.             
    "Good sentiment day, good recovery for the loonie, but not
enough," said Amo Sahota, a director at Klarity FX in San
Francisco.
    The market is waiting for the Canadian jobs report on
Friday, Sahota said.
    Canada's employment report for October and September trade
data are due on Friday.
    Data on Thursday showed that Canada's manufacturing sector
expanded in October at the slowest pace in nearly two years as
production and new business growth lost further momentum.
            
    The IHS Markit Canada Manufacturing Purchasing Managers'
index (PMI) fell to a seasonally adjusted 53.9 last month, its
lowest since January 2017, from 54.8 in September. 
    The price of oil, one of Canada's major exports, was
pressured by growing concerns that global demand is weakening at
a time when output from the world's major oil producers is
surging. U.S. crude oil futures settled 2.5 percent lower at
$63.69 a barrel.             
    The loonie will rally over coming months on a recovery in
demand for riskier assets and as a solid domestic economy
supports more interest rate hikes from a hawkish central bank,
according to a Reuters poll.             
    On Wednesday, Bank of Canada Governor Stephen Poloz repeated
his message that interest rates would need to keep rising to
meet the central bank's inflation target.             
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 2.5 Canadian cents to yield 2.326 percent and the 10-year
            climbed 10 Canadian cents to yield 2.481 percent.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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