CANADA FX DEBT-C$ weakens to nearly 1-week low as oil pulls back

Thu Oct 20, 2016 9:33am EDT
 
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* Canadian dollar at C$1.3181, or 75.87 U.S. cents
    * Loonie touches its weakest since Oct. 14 at C$1.3214
    * Bond prices higher across the yield curve

    TORONTO, Oct 20 (Reuters) - The Canadian dollar weakened to
a nearly 1-week low against its U.S. counterpart on Thursday as
U.S. crude oil pulled back from a 15-month high and investors
weighed the Bank of Canada's more dovish tone.
    Losses for the loonie came one day 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. 
    U.S. crude prices dropped 1.92 percent to $50.61 a
barrel on profit-taking after markets rallied the previous day
on another unseasonal draw in U.S. crude oil stocks.      
     
    At 9:21 a.m. EDT (1321 GMT), the Canadian dollar 
was trading at C$1.3181 to the greenback, or 75.87 U.S. cents,
weaker than Wednesday's close of C$1.3127, or 76.18 U.S. cents.
    The currency's strongest level of the session was C$1.3115,
while it touched its weakest since Oct. 14 at C$1.3214.
    Canada's inflation report for September is due on Friday.
Annual inflation is expected to pick up to 1.5 percent after
slipping towards the lower end of the Bank of Canada's targeted
range a month earlier. 
    Also on Friday, retail sales are expected to have increased
0.3 percent in August, rebounding from a decline a month before.
    Canadian government bond prices were higher across the yield
curve, with the two-year price up 1.5 Canadian cents
to yield 0.555 percent and the benchmark 10-year 
rising 7 Canadian cents to yield 1.185 percent.
    The 2-year yield fell 1.9 basis points further below its
U.S. equivalent, to leave the spread at -26 basis points. It was
-21.1 basis points before the Bank of Canada interest rate
decision on Wednesday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)