November 8, 2019 / 3:42 PM / 14 days ago

CANADA FX DEBT-Loonie hits 3-week low as investors raise BoC rate cut bets

    * Canadian dollar falls 0.4% against the greenback
    * Loonie hits a three-week low at 1.3237
    * Price of U.S. oil falls 2.1%
    * Canadian bond prices rise across the yield curve

    TORONTO, Nov 8 (Reuters) - The Canadian dollar weakened to a
three-week low against its U.S. counterpart on Friday as
investors raised bets on a Bank of Canada interest rate cut over
the coming months after domestic data showing the economy
surprisingly shed jobs last month.
    Canada lost 1,800 jobs in October after robust job growth
over the previous two months, data from Statistics Canada
showed. Analysts had expected jobs to rise by 15,900.
            
    The Bank of Canada last week left the door open to a rate
cut as it expressed concern about trade uncertainty.
            
    Chances of an easing at the central bank's next meeting in
December rose to about 25% from 15% before the data, the
overnight index swaps market indicated.           
    Housing data also showed declines.
    Statistics Canada said that the value of Canadian building
permits dropped by a larger-than-expected 6.5% in September to
C$8.3 billion, while data from the Canadian Mortgage and Housing
Corporation (CMHC) showed that the seasonally adjusted
annualized rate of housing starts fell to 201,973 units in
October from a revised 221,135 units in September.              
    At 10:22 a.m. (1522 GMT), the Canadian dollar          was
trading 0.4% lower at 1.3222 to the greenback, or 75.63 U.S.
cents. The currency touched its weakest intraday level since
Oct. 16 at 1.3237.
    For the week, the loonie was on track to weaken 0.6%.
    The currency's decline came as U.S. President Donald Trump
said he had not agreed to roll back tariffs on Chinese goods,
denting investor optimism that the United States and China would
reach a trade deal.             
    Canada is a major exporter of commodities, including oil, so
its economy could be hurt by a prolonged trade war. U.S. crude
oil futures        were down 2.1% at $55.95 a barrel.      
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 8.5 Canadian cents to yield 1.584% and the 10-year
            was up 35 Canadian cents to yield 1.577%.
    On Thursday, the 10-year yield touched its highest intraday
level since May 24 at 1.650%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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