October 19, 2017 / 8:38 PM / in 2 months

CANADA FX DEBT-C$ softens as oil prices cool, CPI, retail data in focus

    * Canadian dollar at C$1.2479, or 80.13 U.S. cents
    * Bond prices rise across the yield curve
    * 10-year yield touches lowest since Sept. 8 at 1.977
percent

    By Solarina Ho
    TORONTO, Oct 19 (Reuters) - The Canadian dollar slipped
against the U.S. dollar on Thursday, retreating from a near
one-week high earlier in the day, as oil prices fell and the
rally in global stocks paused.
    The weakness came ahead of Friday's domestic inflation data
for September and retail sales figures for August as well as the
Bank of Canada's October rate decision next week.
    Chances of an October hike have fallen to 15 percent from
nearly 50 percent in mid-September, the overnight index swaps
market indicated.           
    "I'd rather be a U.S. dollar seller because I think the
(Federal Reserve) is pretty much fully priced at this point for
December," said Shaun Osborne, chief currency strategist at
Scotiabank.
    "We still think the Bank of Canada goes in December again,
and we're not anywhere fully priced for that, so there's
probably more interest rate risk in the CAD's favor from that
point of view."
    An uncertain outlook for the North American Free Trade
Agreement is a headwind for the loonie and growth in the economy
is expected to slow after rapid expansion in the first half of
the year.
    At 4 p.m. (2000 GMT), the Canadian dollar          was
trading at C$1.2479 to the greenback, or 80.13 U.S. cents, down
0.1 percent.
    The currency, which has been range-bound recently after
rallying nearly 4 percent since early September, touched its
strongest intraday level since Friday at C$1.2451.
    "I think we'll probably continue to pivot around C$1.25,"
said Osborne, adding that Scotiabank remained constructive on
the Canadian dollar in part because of its view on the Bank of
Canada, but also because of its negative view on the U.S.
dollar.
    Prices of oil, one of Canada's major exports, fell on
profit-taking and larger-than-expected product inventories in
the United States. Benchmark crude prices have found support in
recent weeks because of OPEC-led supply cuts, Middle East
tensions and lower U.S. production.             
    U.S. crude        prices settled down 1.4 percent at $51.29
a barrel.
    World stocks retreated from all-time highs as traders marked
30 years to the day since the 1987 Black Monday stock market
crash.             
    Canada's commodity linked-currency tends to benefit from
risk appetite.
    Canadian government bond prices were higher across the yield
curve. The two-year            rose 5 Canadian cents to yield
1.488 percent, while the 10-year             rose 3 Canadian
cents to yield 2.013 percent.
    The 10-year yield touched its lowest since Sept. 8 at 1.977
percent.  

 (Reporting by Solarina Ho and Fergal Smith; Editing by Meredith
Mazzilli and Peter Cooney)
  
 

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