January 11, 2018 / 3:00 PM / 7 months ago

CANADA FX DEBT-C$ steadies as NAFTA risk, rate hike prospects weighed

    * Canadian dollar at C$1.2549, or 79.69 U.S. cents
    * Loonie touches its weakest since Dec. 20 at C$1.2590
    * Bond prices mixed across a steeper yield curve

    TORONTO, Jan 11 (Reuters) - The Canadian dollar steadied
against the greenback on Thursday after hitting a nearly
two-week low earlier in the session as investors weighed chances
of a Bank of Canada interest rate hike next week and worried
about a U.S. withdrawal from NAFTA.
    At 9:20 a.m. EST (1420 GMT), the Canadian dollar         
was little changed at C$1.2549 to the greenback, or 79.69 U.S.
cents. The currency touched its weakest level since Dec. 29 at
C$1.2590.
    The United States must be taken seriously when it says it
might walk away from the North American Free Trade Agreement,
Canada's foreign minister said, a day after government sources
said Ottawa was increasingly convinced U.S. President Donald
Trump would pull the plug on the trade pact.             
    Chances of an interest rate hike next week, which had
climbed on recent strong employment figures, have slipped to
around 70 percent from nearly 90 percent on Monday, data from
the overnight index swaps market showed.               
    The price of oil, one of Canada's major exports, reached
multiyear highs despite warnings that a 13 percent rally since
early December was close to running its course.             
    U.S. crude        was up 0.41 percent at $63.83 a barrel. 
    The U.S. dollar        fell against a basket of major
currencies after the European Central Bank said it could revisit
its policy message in early 2018, boosting the euro.
            
    Canadian new home prices edged up 0.1 percent in November
from October, boosted by gains in Ottawa, data from Statistics
Canada showed. Prices were unchanged in a number of other
markets, including the major city of Toronto.             
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            up 0.1 Canadian cent
to yield 1.763 percent and the 10-year             falling 16
Canadian cents to yield 2.184 percent.
    On Wednesday, the 10-year yield reached its highest intraday
since September 2014 at 2.231 percent.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
  
 
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