June 21, 2018 / 8:39 PM / 2 months ago

CANADA FX DEBT-C$ steadies near one-year low ahead of inflation data

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.3302, or 75.18 U.S. cents
    * Loonie touches weakest since June 2017 at C$1.3336
    * Bond prices higher across flatter yield curve
    * 10-year yield touches its lowest since April 4 at 2.123
percent

    By Fergal Smith
    TORONTO, June 21 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday after hitting
its weakest in nearly one year earlier in the session, as
investors waited for domestic inflation data and a meeting of
major oil producers.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading nearly unchanged at C$1.3302 to the greenback, or 75.18
U.S. cents. The currency touched its weakest level since June
22, 2017, at C$1.3336.
    "It is no surprise that the market is flat ahead of the OPEC
meeting and critical reports on the consumer and inflation,"
said Adam Button, currency analyst at ForexLive.
    Canadian inflation data for May and the April retail sales
report are due out on Friday and could help guide investor
expectations for an interest rate hike next month from the Bank
of Canada           .
    Investors are betting that Bank of Canada interest rate
hikes will peak before they reach the central bank's estimate of
neutral, as rising trade tensions and high domestic debt loads
threaten to slow the growth of the country's economy.
            
    The price of oil, one of Canada's major exports, fell ahead
of a meeting on Friday of the Organization of the Petroleum
Exporting Countries, where producers were expected to boost
output to stabilise prices.             
    U.S. crude oil futures        settled 0.3 percent lower at
$65.54 a barrel.
    Stocks on Wall Street fell as the impact of an ongoing trade
spat between the United States and China began to appear in
company earnings forecasts, while a media report said Beijing
could target U.S. blue-chip firms.             
    Canada runs a current account deficit so its currency could
suffer if increased risk aversion disrupts the flow of capital.
    The loonie has also been pressured recently by slow-moving
talks to renegotiate the North American Free Trade Agreement and
a trade feud between the United States and Canada.
    "The tone on trade has been bad but the Canadian dollar
still doesn't reflect how nasty a true trade dust up could get,"
Button said.
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 37 Canadian
cents to yield 2.143 percent. 
    The 10-year yield touched its lowest intraday since April 4
at 2.123 percent.
    Canadian wholesale trade increased by 0.1 percent in April
from March after an upwardly revised 1.4 percent gain in the
prior month, Statistics Canada said.               

 (Reporting by Fergal Smith)
  
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