September 9, 2019 / 8:29 PM / 9 days ago

CANADA FX DEBT-Loonie posts 6-week high as domestic economy impresses investors

 (Adds strategist quotes and details throughout, updates prices)
    * Loonie posts a near six-week high at 1.3140 per U.S.
dollar
    * Price of U.S. oil increases 2.4%
    * Chances of a BoC rate cut in October fall to less than 20%
    * Canada's 10-year yield touches a one-month high at 1.352%

    By Fergal Smith
    TORONTO, Sept 9 (Reuters) - The Canadian dollar strengthened
to its highest level in nearly six weeks against its U.S.
counterpart on Monday as the price of oil, one of Canada's major
exports, rose and recent data bolstered investor confidence in
the domestic economy.
    At 3:57 p.m. (1957 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3160 to the greenback, or 75.99 U.S.
cents. The currency, which last week snapped a seven-week losing
streak, touched its strongest intraday level since July 31 at
1.3140.
    Data on Friday showed that Canada's economy added 81,100
jobs in August. It followed data the previous week showing that
gross domestic product expanded at an annualized rate of 3.7% in
the second quarter, even as other countries were being hurt by
global trade uncertainty.
    Recent data has indicated to investors that the Canadian
economy "was weathering the geopolitical storm quite well," said
Brad Schruder, director of corporate sales and structuring at
BMO Capital Markets.
    The Bank of Canada reinforced last week the rosy view on the
Canadian economy when it left interest rates on hold, Schruder
added.
    Chances of a rate cut at the Bank of Canada's next interest
rate decision on Oct. 30 have fallen to less than 20% from about
70% before last Wednesday's interest rate decision.             
    "I would suspect you see the Canadian dollar potentially
appreciate another penny to a penny-and-a-half before it finds a
short-term floor and starts to go the other way," Schruder said.
    Since the beginning of 2019, the loonie has gained 3.7%,
making it the top-performing G10 currency. 
    Oil prices climbed on Monday after the new Saudi energy
minister, Prince Abdulaziz bin Salman, confirmed expectations he
would stick with his country's policy of limiting crude output
to support prices. U.S. crude oil futures        settled 2.4%
higher at $57.85 a barrel.                 
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as risk appetite improved
amid easing U.S.-China trade tensions and expectations of
less-aggressive action from the European Central Bank this week.
            
    The two-year            fell 11.5 Canadian cents to yield
1.551% and the 10-year             was down 60 Canadian cents to
yield 1.345%. The 10-year yield touched its highest intraday
level since Aug. 6 at 1.352%.

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