November 28, 2016 / 2:37 PM / 9 months ago

CANADA FX DEBT-C$ strengthens to nearly 1-week high as oil rallies

3 Min Read

* Canadian dollar at C$1.3417, or 74.53 U.S. cents
    * Loonie touches its strongest since Nov. 22 at C$1.3404
    * Bond prices higher across the yield curve

    TORONTO, Nov 28 (Reuters) - The Canadian dollar strengthened
to a nearly one-week high against its U.S. counterpart on Monday
as oil rallied ahead of a meeting this week of major oil
producers, while investors awaited a speech by Bank of Canada
Governor Stephen Poloz.
    Oil prices gained more than two percent in volatile trading,
recouping earlier losses as the market reacted to the shaky
prospect of the Organization of the Petroleum Exporting
Countries being able to agree output cuts at a meeting on
Wednesday. 
    U.S. crude prices were up 2.45 percent at $47.19 a
barrel. Oil is on of Canada's major exports.
    At 9:19 a.m. EST (1419 GMT), the Canadian dollar 
was trading at C$1.3417 to the greenback, or 74.53 U.S. cents,
stronger than Friday's close of C$1.3527, or 73.93 U.S. cents.
    The currency's weakest level of the session was C$1.3537,
while it touched its strongest since Nov. 22 at C$1.3404.
    Poloz will give a speech at the C.D. Howe Institute in
Toronto, followed by a press conference. The Bank of Canada will
release his prepared remarks at 7:45 p.m. EST.
    The governor of Canada's central bank is likely to be
pressed on what the U.S. election of Donald Trump means for
Canada, particularly its export sector, which has long been key
to the central bank's outlook.
    The market is underestimating the prospect of further
interest rate cuts from the Bank of Canada, some economists
said, as an uncertain outlook for the NAFTA trade accord
following the U.S. election risks derailing an expected pick-up
in Canada's business spending.            
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year 
rose 2.5 Canadian cents to yield 0.657 percent and the benchmark
10-year climbed 20 Canadian cents to yield 1.545
percent.
    Last week, the 10-year yield touched an 11-month high at
1.614 percent.
    Canada's gross domestic product data for the third quarter
is due on Wednesday. Growth is expected to have accelerated by
an annualized 3.4 percent, rebounding from a contraction in the
second quarter that was caused by wildfires in Alberta. 

 (Reporting by Fergal Smith; Editing by Nick Zieminski)

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