October 20, 2016 / 8:57 PM / 9 months ago

CANADA FX DEBT-C$ falls to 1-week low pressured by lower oil price

3 Min Read

(Adds analyst quote and details on finance minister and updates
prices)
    * Canadian dollar at C$1.3222, or 75.63 U.S. cents
    * Loonie touches its weakest since Oct. 13 at C$1.3231
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Oct 20 (Reuters) - The Canadian dollar fell to a
1-week low against its broadly firmer U.S. counterpart on
Thursday, pressured by lower oil prices and the Bank of Canada's
more dovish tone.
    The loonie's losses occurred a 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. 
    It was "another down day for the Canadian dollar," as oil
fell and as the Bank of Canada's comments helped widen interest
rate differentials between the U.S. and Canada, said Scott
Smith, senior market analyst at Cambridge Global Payments.
    Canada's 2-year yield fell 3.2 basis points further below
its U.S. equivalent, to leave the spread at -27.3 basis points.
It was -21.1 basis points before the Bank of Canada interest
rate decision on Wednesday.
    U.S. crude prices settled $1.17 lower at $50.43 a
barrel as a resurgent U.S. dollar encouraged players to take
profit on the previous day's rally that sent U.S. crude to
15-month highs.            
    The Canadian dollar ended at C$1.3222 to the
greenback, or 75.63 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. 13 at C$1.3231.
    Canadian Finance Minister Bill Morneau said he would provide
an update on the government's economic and fiscal situation on
Nov. 1, which would take into consideration recommendations by
an economic advisory council that included creating an
infrastructure development bank and boosting immigration.
 
    Canadian government bond prices were higher across the yield
curve, with the two-year up 2.5 Canadian cents to
yield 0.55 percent and the benchmark 10-year rising
20 Canadian cents to yield 1.171 percent.
    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.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Grant McCool)

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