November 11, 2016 / 9:52 PM / 8 months ago

CANADA FX DEBT-C$ hits new 8-month low as oil tumbles, investors buy greenbacks

3 Min Read

(Adds analyst quotes and details on Bank of Canada governor's
comments, updates prices)
    * Canadian dollar at $1.3538, or 73.87 U.S. cents
    * Loonie touches its weakest since March 1 at C$1.3548
    * Loonie loses 1 percent for the week
    * Bond market closed for Remembrance Day

    By Fergal Smith
    TORONTO, Nov 11 (Reuters) - The Canadian dollar weakened to
a fresh eight-month low against its U.S. counterpart on Friday
as oil tumbled and as the greenback padded its gains since the
U.S. election this week.
    For the week, the loonie lost 1 percent.
    U.S. crude oil futures settled $1.25 lower at $43.41
a barrel after OPEC said October output reached another record,
casting doubt on whether its plan to limit production is
achievable or enough to ease persisting oversupply. 
    "I think things will probably continue to be volatile,
probably moving against the loonie in the short term" until OPEC
resolves oversupply issues for oil, said Jeff Scott, senior
corporate dealer at OFX.
    Oil is one of Canada's major exports.
    Investor demand for U.S. dollars to buy stocks, betting that
policies from U.S. President-elect Donald Trump will be
supportive of stock prices, has added to pressure on Canada's
currency, Scott said.
    The U.S. dollar gained ground against a basket of
major currencies.
    At 4:33 p.m. EDT (2133 GMT), the Canadian dollar 
was trading at C$1.3538 to the greenback, or 73.87 U.S. cents,
weaker than Thursday's close of C$1.3483, or 74.17 U.S. cents.
    The currency's strongest level of the session was C$1.3456,
while it touched its weakest since March 1 at C$1.3548.
    Trump has vowed to either renegotiate or scrap the North
American Free Trade Agreement, under which Canada sends 75
percent of all its exports to the United States.
    "With the unforeseen risks of Trump in the White House,"
Bank of Canada Governor Stephen Poloz may continue to favor a
weaker Canadian dollar, said Scott.
    "I think we could see him continue to jawbone the loonie."
he added.
    Speaking at a central bank conference in Santiago, Poloz
said he could not speculate on how Trump's election as U.S.
president would affect monetary policy, but that the central
bank will respond to shocks as needed and rely on its inflation
target to set interest rates. 
    Canada's bond market was closed on Friday for Remembrance
Day.
    On Thursday, the 10-year yield touched its highest intraday
since May at 1.498 percent as investors bet that Trump will
enact policies that will increase inflation.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama and James
Dalgleish)

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