October 16, 2018 / 1:48 PM / 2 years ago

CANADA FX DEBT-C$ strengthens to nearly one-week high as stocks rise

    * Canadian dollar rises 0.3 percent against greenback
    * Loonie touches strongest level since Oct. 10
    * Canadian bond prices dip across yield curve
    * Foreign investment in Canadian securities slows in August

    TORONTO, Oct 16 (Reuters) - The Canadian dollar strengthened
to nearly a one-week high against the greenback on Tuesday,
boosted by a rise in stocks and growing expectations of a Bank
of Canada interest rate hike next week.
    Stocks gained as upbeat earnings reports helped ease jitters
over the impact of various global issues, including tariffs, on
corporate profits.             
    Canada runs a current account deficit, so its economy could
be hurt if the flow of trade or capital slows. 
    Still, Canadian business optimism remained at near-record
levels in the third quarter as companies reported rising
pressure on capacity, labor and prices amid signs of stronger
sales, the Bank of Canada said on Monday.             
    The central bank has raised rates four times since July
2017. Its policy rate is currently 1.50 percent.
    Chances of another rate hike at the Oct. 24 announcement
have climbed to more than 90 percent. They were less than 80
percent before a deal to revamp the North American Free Trade
Agreement was struck at the end of September.
    At 9:10 a.m. (1310 GMT), the Canadian dollar          was
trading 0.3 percent higher at 1.2945 to the greenback, or 77.25
U.S. cents.
    The Canadian currency touched its strongest level since Oct.
10 at 1.2946 even as the price of oil, one of Canada's exports,
fell and foreign investment in Canadian securities slowed.
    U.S. crude        prices were down 0.6 percent at $71.36 a
barrel, pressured by evidence of higher U.S. oil production and
increasing U.S. crude inventories.                 
    Foreign investors bought a net C$2.82 billion in Canadian
securities in August, following a revised C$15.29 billion total
purchase in July, Statistics Canada said. It was the lowest
monthly investment since the beginning of the year.             
    Canadian government bond prices were lower across the yield
curve, with the 10-year             falling 6 Canadian cents to
yield 2.509 percent.
    Earlier this month, the 10-year yield touched its highest
level in nearly five years at 2.615 percent.

 (Reporting by Fergal Smith
Editing by Paul Simao)
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