October 7, 2019 / 1:36 PM / 15 days ago

CANADA FX DEBT-Canadian dollar edges higher as oil prices climb

    * Canadian dollar rises 0.1% against the greenback
    * Loonie trades in a range of 1.3291 to 1.3331
    * Price of U.S. oil increases 1.5%
    * Canada's 10-year yield touches a one-month low at 1.226%

    TORONTO, Oct 7 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday as oil prices rose, but
the currency's gains were modest ahead of trade talks this week
between the United States and China.
    Stocks edged up globally as broadly positive U.S. jobs data
from last week quelled some fears about an economic slowdown,
but nervousness over U.S.-China trade talks persisted after a
report that Chinese officials are signaling they are
increasingly reluctant to agree to a broad trade deal pursued by
U.S. President Donald Trump.             
    Canada exports many commodities, including oil, so its
economy could be hurt by prolonged global trade uncertainty.
    U.S. crude oil futures        rallied 1.5% to $53.61 a
barrel, supported by challenges to supply facing major
exporters.             
    At 9:11 a.m. (1311 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3293 to the greenback, or 75.23 U.S.
cents. The currency, which weakened 0.4% last week, traded in a
range of 1.3291 to 1.3331.
    The modest gain for the loonie follows data on Friday
showing that Canada's trade deficit shrank by almost a third in
August to C$955 million as exports broke a two-month slump,
rising by 1.8%.             
    The Canadian dollar will gain ground against its U.S.
counterpart over the coming year, supported by strengthening of
the domestic economy and a narrower gap between Canadian and
U.S. interest rates, a Reuters poll predicted.             
    Speculators have raised their bullish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
and Reuters calculations showed on Friday. As of Oct. 1, net
long positions had increased to 6,327 contracts from 4,592 in
the prior week.               
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 4 Canadian cents to yield 1.435% and the 10-year
            was down 29 Canadian cents to yield 1.265%.
    Earlier in the day, the 10-year yield touched its lowest
since Sept. 5 at 1.226%.    

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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