July 4, 2018 / 1:41 PM / 12 days ago

CANADA FX DEBT-C$ steadies near three-week high as oil prices dip

    * Canadian dollar at C$1.3142, or 76.09 U.S. cents
    * Loonie touches its strongest since June 15 at C$1.3113
    * Price of U.S. oil falls 0.2 percent
    * Bond prices mixed across the yield curve

    TORONTO, July 4 (Reuters) - The Canadian dollar steadied
against its U.S. counterpart on Wednesday after touching its
strongest intraday level in nearly three weeks, as oil prices
pared some recent gains and a holiday in the United States
restrained activity in currency markets.
    U.S. crude oil, which notched a 3-1/2-year high on Tuesday,
slipped 0.5 percent to $73.77 a barrel. Oil is one of Canada's
major exports.   
    Major currencies largely traded within ranges with
Independence Day celebrations in the United States discouraging
traders from taking big positions, not least until there is some
clarity about where escalating U.S.-China trade tensions are
heading. Washington is due to impose tariffs on Chinese imports
at the end of the week.             
    At 9:26 a.m. EDT (1326 GMT), the Canadian dollar         
was trading nearly unchanged at C$1.3142 to the greenback, or
76.09 U.S. cents. The currency touched its strongest since June
15 at C$1.3113.
    Recent domestic data has supported the view that the Bank of
Canada could hike its benchmark interest rate, which sits at
1.25 percent, for the fourth time since last summer.
    On Tuesday, data showed that growth in the Canadian
manufacturing sector accelerated in June to its fastest pace in
more than seven years.
    Money markets see a greater-than 70 percent chance of a rate
increase at the July 11 announcement.           
    Still, a trade dispute with the United States and
slow-moving talks to revamp the North American Free Trade
Agreement cloud the outlook for Canada's economy.
    Also, reduced Canadian oil supplies after a production
problem at the Syncrude oil sands facility in Alberta could hurt
the country's economic growth in the third quarter.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            price flat to yield 1.895
percent and the 10-year             falling 5 Canadian cents to
yield 2.144 percent.
    On Tuesday, the 10-year yield touched its highest intraday
level in more than two weeks at 2.204 percent.
    Canada's employment report for June and trade data for May
are due out on Friday.    

 (Reporting by Fergal Smith
Editing by Frances Kerry)
  
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