July 26, 2019 / 8:31 PM / 25 days ago

CANADA FX DEBT-C$ steadies, after hitting 1-month low on U.S. data

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar trades near flat against the greenback
    * Loonie hits a one-month low
    * Oil prices gain 0.3%
    * Bond prices mixed across a flatter yield curve

    By Levent Uslu
    TORONTO, July 26 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday, recovering from
an earlier one-month low which it hit after better-than-expected
U.S. data and the ruling out of currency intervention by a top
White House adviser.
    The Trump administration has "ruled out" intervening in
markets to lower the U.S. dollar's value, even though President
Donald Trump is concerned other countries are weakening their
currencies to gain a trade advantage, White House economic
adviser Larry Kudlow told CNBC.             
    "Larry Kudlow gave his interview and said that the U.S.
would not intervene to weaken the dollar, and as a result the
dollar index just took off, and dollar-Canada went along with
it." said Greg Anderson, global head of foreign exchange
strategy at BMO capital markets in New York.
    The U.S. dollar        was also boosted by data showing the
U.S. economy expanded at a 2.1% annualized rate in the second
quarter.             
    Still, the data did not alter the view that the U.S. Federal
Reserve would soon lower interest rates for the first time in a
decade. 
    At 3:56 p.m. (1956 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3168 to the greenback, or 75.94
U.S. cents. The currency touched its lowest intraday level since
June 25 at 1.3199.
    For the week the loonie was down 0.8%, the second straight
week it declined.
    Meanwhile, the price of oil, one of Canada's major exports,
was boosted by upbeat U.S. economic data and concerns over the
safety of oil transport around the Strait of Hormuz. U.S. crude
oil futures        settled 0.3% up at $56.20 a barrel
            
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 3 Canadian cents
to yield 1.465% and the 10-year             rising 3 Canadian
cents to yield 1.464%.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 2.4 basis points to a spread of 63.1 basis
points in favor of the U.S. bond, the biggest gap since June 18.
    Canada posted a budget deficit of C$1.41 billion in the
first two months of the 2019-2020 fiscal year, following a
C$3.18 billion surplus posted a year earlier.             

 (Reporting by Levent Uslu
Editing by Bill Trott and Jonathan Oatis)
  
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