November 8, 2016 / 9:53 PM / 8 months ago

CANADA FX DEBT-C$ gains despite strong greenback as America votes

3 Min Read

* Canadian dollar settles at C$1.3305, or 75.16 U.S. cents
    * Currency notches strongest close since Oct. 24
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, Nov 8 (Reuters) - The Canadian dollar gained
against a broadly higher U.S. currency on Tuesday, supported by
expectations that Democratic presidential candidate Hillary
Clinton is likely to prevail over Republican rival Donald Trump
in the U.S. election.
    The Canadian dollar settled at C$1.3305 to the
greenback, or 75.16 U.S. cents, stronger than Monday's close of
C$1.3372, or 74.78 U.S. cents.
    That was its strongest close since Oct. 24, and comes after
it touched its weakest level since March at C$1.3466 on Friday.
    A potential victory for Clinton is seen as less of a threat
to Canada's trade-intensive economy than a win for Trump, who
has said he would renegotiate or scrap the North American Free
Trade Agreement if elected. 
    But the end of the acrimonious campaign could turn focus for
the country's currency to other catalysts including the outlook
for oil, a major Canadian export.
    "A clear path to the White House for her would probably mean
that fundamentals are coming back, and that is where the
Canadian dollar could face some issues," said Alfonso Esparza, a
senior market analyst at OANDA.
    He pointed to a reading of U.S. oil inventories due on
Wednesday and a meeting of oil producers later this month
seeking agreement on a production cut as key drivers for the
loonie post-election.
    The Canadian currency's strongest level of the session was
C$1.3286, while its weakest was C$1.3391.
    Oil prices settled little changed on the day. 
    Canadian housing starts slowed in October as condo
construction slipped after a surge in September, data from the
national housing agency showed. 
    In other domestic data, the value of building permits fell
by 7 percent in September from August, the biggest drop in eight
months, data from Statistics Canada showed. 
    Canadian government bond prices were lower across the yield
curve, with the two-year down 5.5 Canadian cents to
yield 0.582 percent and the benchmark 10-year 
falling 49 Canadian cents to yield 1.273 percent.
    Structural weaknesses are weighing heavily on Canada's
export sector but an improved mix of fiscal and monetary policy
has taken some pressure off the central bank to stimulate
demand, a senior Bank of Canada official said. 
    The federal Liberal government is pouring money into
infrastructure spending in a bid to revitalize a limping
economy, investment Bank of Canada Governor Stephen Poloz has
supported.

 (Additional reporting by Fergal Smith, editing by G Crosse)

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