CANADA FX DEBT-C$ pulls back from 2-week high as oil falls

Mon Oct 17, 2016 4:22pm EDT
 
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(Adds broker comment, updates prices to close)
    * Canadian dollar settles at C$1.3130, or 76.16 U.S. cents
    * Bond prices higher across the yield curve
    * 10-year yield touches its highest since June 23 at 1.300
pct

    By Alastair Sharp
    TORONTO, Oct 17 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Monday, but the loonie pulled
back from an earlier two-week high as oil fell and investors
awaited a Bank of Canada interest rate decision and economic
update mid-week.
    The Canadian currency has strengthened in recent sessions as
a stronger U.S. dollar trend against a range of currencies has
stalled.
    "Oil's had a little push back over $50 (a barrel), today
we've dipped below, but with a couple of technical failures over
C$1.33 people are just maybe losing a little faith short-term in
this (U.S. dollar strength) trade," said Darcy Browne, managing
director of foreign exchange sales at CIBC Capital Markets.
    "I would still rather buy the dip to C$1.30 and take my
chances there, and let the fundamentals play themselves out," he
said.
    The Canadian dollar settled at C$1.3130 to the
greenback, or 76.16 U.S. cents, slightly stronger than Friday's
close of C$1.3145, or 76.07 U.S. cents.
    The currency's weakest level of the session was C$1.3183,
while it touched its strongest since Sept. 29 at C$1.3065.
    The Bank of Canada is expected to hold interest rates at
0.50 percent on Wednesday as it waits to see how the economic
bounce-back it is anticipating in the second half of the year
unfolds.
    The U.S. Federal Reserve, meanwhile, is being closely
watched for signs it may be ready to hike rates, with its bond
yields just off four-month highs.
    Canadian government bond prices were higher across the yield
curve, with the two-year price up 4 Canadian cents to
yield 0.601 percent and the benchmark 10-year rising
26 Canadian cents to yield 1.220 percent.
    The 10-year yield touched its highest intraday since June 23
at 1.300 percent.
    Oil prices settled lower, weighed by oversupply concerns,
with a spike in trade volume driving U.S. prices below $50 while
a projected drop in American shale output limited losses. 
    The modest gains for the loonie came as foreign investment
in Canadian securities rose to C$12.74 billion in August from
C$9.10 billion in July. 
    Speculators cut bearish bets on the Canadian dollar,
Commodity Futures Trading Commission data showed on Friday.
 
    Canadian manufacturing workers at Fiat Chrysler Automobiles
voted on Sunday to approve a tentative labor agreement with the
automaker, their union said, averting a strike and clearing the
way for talks with Ford Motor Co.    

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and Andrew Hay)