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Bonds News

CANADA FX DEBT-Canadian dollar beats G10 peers as U.S. bond yields fall

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie trades in a range of 1.2680 to 1.2746
    * Price of U.S. oil settles 0.6% lower
    * Canadian bond yields ease across a flatter curve

    By Fergal Smith
    TORONTO, Jan 13 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Wednesday as a drop in U.S.
Treasury yields capped broader gains for the greenback and Wall
Street neared a record high, with the loonie reversing its
earlier decline.    
    The loonie        strengthened 0.1% to 1.2700 per greenback,
or 78.74 U.S. cents, having traded in a range of 1.2680 to
1.2746. It was the only G10 currency to advance against the U.S.
dollar       .   
    The loonie benefited from a pullback in U.S. bond yields and
stocks moving close to an all-time high, said Shaun Osborne,
chief currency strategist at Scotiabank.    
    U.S. Treasury yields slid as investors showed strong demand
for long-dated bonds in an auction. Rising Treasury yields in
recent days had supported the U.S. dollar       , driven by
expectations of higher government spending under President-elect
 Joe Biden's incoming administration.                         
    "We have probably seen some stop-loss selling of
dollar-Canada on the move back under 1.27 and I suspect we've
also seen some liquidation of EUR-CAD longs as well," Osborne
said.
    The loonie touched its strongest level in nearly five weeks
against the euro           at 1.5409.
    The price of oil, one of Canada's major exports, fell as
rising global COVID-19 cases threatened to hamper global fuel
demand. U.S. crude oil futures settled 0.6% lower at $52.91 a
barrel.              
    Capital investment in Canada's upstream oil and gas industry
will rise 14% this year, the Canadian Association of Petroleum
Producers said, although spending remains well below
pre-pandemic levels.             
    As a second wave of COVID-19 cases strengthens in Canada,
money markets see an increased chance of the Bank of Canada
cutting interest rates closer to zero.             
    Canadian government bond yields eased across a flatter
curve. The 10-year             fell 2.9 basis points to 0.812%,
pulling back from its highest intraday level in nearly 10 months
at 0.887% on Tuesday.

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Peter
Cooney)
  
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