November 7, 2019 / 9:46 PM / 7 days ago

CORRECTED-CANADA FX DEBT-Loonie rebounds from 8-day low as trade deal hopes rise

 (Corrects third bullet point)
    * Canadian dollar trades near flat against the greenback
    * Loonie touches an eight-day low at 1.3197
    * Price of U.S. oil increases 1.4%
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Nov 7 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday, recovering from an
earlier eight-day low as domestic jobs data loomed and Beijing
signaled a trade deal with the United States was close to being
sealed.
    At 4:31 p.m. (2131 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3174 to the greenback, or 75.91 U.S.
cents. The currency touched its weakest intraday level since
Oct. 30, the day of a Bank of Canada interest rate announcement,
at 1.3197.    
    The Bank of Canada has diverged this year from some other
central banks, such as the Federal Reserve, that have eased
interest rates. It has left its benchmark interest rate on hold
at 1.75% as inflation stayed close to its 2% target and Canada's
economy added jobs at a robust pace.             
    Canada's employment report for October is due on Friday.
    "I think the job number tomorrow if it does come outside the
range of expectations will move it (the Canadian dollar) quite a
bit," said Hosen Marjaee, a senior portfolio manager at Manulife
Asset Management. "I think it will have an impact on the Bank of
Canada decision on what to do next."
    The Canadian dollar will edge higher over the coming 12
months, supported by the solid performance of Canada's economy
and its high yield relative to other major currencies, a Reuters
poll showed.                
    Global shares rose and bond yields climbed after China said
it had agreed with the United States to remove tariffs in
phases, while state-owned Xinhua News Agency said Beijing was
also considering removing restrictions on poultry imports.
                        
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade.
    U.S. crude oil futures        settled 1.4% higher at $57.15
a barrel as hopes rose for an end to the trade dispute that has
weighed on economic growth and fuel demand.                 
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 5.5 Canadian cents to yield 1.625% and the
10-year             was down 67 Canadian cents to yield 1.613%. 
  
    The inversion of Canada's yield curve, a traditional
harbinger of recession, receded. The gap between the 2- and
10-year yields narrowed by 4.3 basis points to a spread of 1.2
basis points in favor of the shorter-dated bond, which was the
smallest gap since July 29.

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