CANADA FX DEBT-C$ turns weaker as dour Bank of Canada offsets oil surge
(Recasts after Bank of Canada news conference, adds analyst comment, updates prices) * Canadian dollar at C$1.3135, or 76.13 U.S. cents * Bond prices turn higher across yield curve By Fergal Smith and Alastair Sharp TORONTO, Oct 19 (Reuters) - The Canadian dollar fell on Wednesday after Bank of Canada policymakers said they had considered adding more monetary stimulus and that export weakness could be harder to turn around than they had thought, cancelling out earlier oil-powered gains. The currency had strengthened to a nearly four-week high after a shock drop in U.S. crude inventories led to a surge in prices for oil, a major Canadian export. But those gains were erased as the central bank said it expects a permanent shortfall in exports to shave 0.6 percentage points off growth by the end of 2018. "They're getting pretty negative about the export picture, especially the non-energy export picture," said Michael Goshko, corporate risk manager at Western Union Business Solutions. "Then the icing on the cake was when they said that the governing council actively discussed the possibility of adding more monetary stimulus," he said. The central bank cut its growth forecast, citing a looming slowdown in housing and the weaker export outlook, but held its overnight rate at 0.5 percent, where it has been since July 2015. At 1:19 p.m. EDT (1719 GMT), the Canadian dollar was trading at C$1.3135 to the greenback, or 76.13 U.S. cents, weaker than Tuesday's close of C$1.3119, or 76.23 U.S. cents. It had touched its strongest since Sept. 22 at C$1.3012, with U.S. crude hitting 15-month highs after government data showed a surprisingly large drop in domestic inventories for the sixth week out of seven. U.S. crude prices were last up 2.8 percent at $51.71. Canadian government bond prices turned higher, with the two-year up 5.5 Canadian cents to yield 0.562 percent and the benchmark 10-year adding 3 Canadian cents to yield 1.191 percent. The premier of the Belgian region that is the main impediment to a planned EU-Canada free trade agreement advised postponing a summit next week to sign the deal and taking a few more months to fix outstanding issues. A Canadian government advisory group will this week recommend the creation of an infrastructure bank and urge increased immigration to stoke economic growth, the Globe and Mail reported. (Reporting by Fergal Smith and Alastair Sharp; Editing by Nick Zieminski and Meredith Mazzilli)
© Thomson Reuters 2017 All rights reserved.