June 26, 2018 / 9:20 PM / 5 months ago

CANADA FX DEBT-C$ steadies as investors take stock of BoC rate hike odds

 (Adds strategist quotes, details on activity; updates prices)
    * Canadian dollar at C$1.3312, or 75.12 U.S. cents
    * Price of U.S. oil jumps 3.6 percent
    * Bank of Canada Governor Stephen Poloz due to speak
Wednesday
    * Bond prices lower across a flatter yield curve

    By Fergal Smith
    TORONTO, June 26 (Reuters) - The Canadian dollar was little
changed against its broadly stronger U.S. counterpart on Tuesday
but rose against some other major currencies as investors
determined that a recent reduction in Bank of Canada interest
rate hike bets had gone far enough.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.3312 to the greenback, or 75.12
U.S. cents. 
    The currency traded in a range of C$1.3281 to C$1.3329. On
Friday, it touched its weakest level in a year at C$1.3384.
    Expectations that the central bank will hike its benchmark
rate, which sits at 1.25 percent, next month have been crimped
by rising trade tensions and domestic data on Friday that showed
weaker-than-expected retail sales and inflation.
    Chances of an interest rate hike in July had sunk to less
than 50 percent from about 70 percent before the data but
recovered on Tuesday to be slightly better than a coin toss.    
        
    "There is just a slight move in Canada, both in rates and
the currency, today where the feeling was that it has gone too
far in terms of taking out the bank (rate) actions for the
remainder of the year," said Mark Chandler, head of Canadian
fixed income and currency strategy.
    Bank of Canada Governor Stephen Poloz will give a speech and
press conference on Wednesday in Victoria, British Columbia.
    The U.S. dollar        rose against a basket of currencies
as escalating concerns of a trade conflict between the United
States and China pushed markets to unwind their bets in
high-yielding currencies.             
    The loonie rose more than 0.2 percent against the Australian
dollar and about 0.4 percent against the euro.     
    Canada has its own trade dispute with the United States and
is also in slow-moving talks to revamp the North American Free
Trade Agreement.   
    The price of oil was supported by Canadian production losses
and uncertainty over Libyan exports. U.S. crude oil futures
       settled 3.6 percent higher at $70.53 a barrel.
                        
    Canada could lose as much as 10 percent of its oil supply in
July after a power outage last week shut the Syncrude facility
in Alberta, which can produce up to 360,000 barrels per day.
            
    The loss of supply could reduce Canadian third quarter
growth by about 0.5 percent but the impact may be transitory,
Chandler said. 
    Canadian government bond prices were lower across a flatter
yield curve, with the 10-year             falling 6 Canadian
cents to yield 2.102 percent.

 (Reporting by Fergal Smith
Editing by Paul Simao and Tom Brown)
  
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