CANADA FX DEBT-C$ strengthens on higher oil, prospects for Keystone XL

Tue Jan 24, 2017 10:02am EST
 
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* Canadian dollar at C$1.3201, or 75.75 U.S. cents
    * Loonie touches its strongest since Jan. 18 at C$1.3200
    * Bond prices lower across the yield curve

    TORONTO, Jan 24 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday, helped by higher oil
prices and the prospect of advanced construction of the Keystone
XL pipeline.
    U.S. President Donald Trump intends to sign two executive
actions on Tuesday that would advance construction of Keystone
XL and Dakota Access pipelines, an administration official told
Reuters. 
    TransCanada Corp's proposed Keystone XL pipeline had been
rejected by the Obama administration because of environmental
concerns.
    U.S. crude prices were up 0.80 percent at $53.17 a
barrel, helped by news of lower production by OPEC and other key
exporters. 
    Oil is one of Canada's major exports.
    At 9:38 a.m. ET (1438 GMT), the Canadian dollar was
trading at C$1.3201 to the greenback, or 75.75 U.S. cents,
stronger than Monday's close of C$1.3267, or 75.37 U.S. cents.
    The weakest level of the session was C$1.3299, while the
loonie touched its strongest since Jan. 18 at C$1.3200.
    The U.S. dollar recovered from a dip on fears that
Trump's focus on protectionism over fiscal stimulus suggested
his administration might be content to gain a competitive
advantage through a weaker currency. 
    Trump's push to renegotiate the North American Free Trade
Agreement threatens the Canadian economy. Canada sends more than
75 percent of its exports to the United States.
    The head of a business advisory council to Trump played down
on Monday the risk to Canada from any changes to NAFTA.
 
    A planned EU-Canada free-trade deal moved closer to reality
on Tuesday after a key committee advised the European Parliament
to give its backing after months of protests and heated debate.
 
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries and German Bunds as the
euro zone started 2017 by maintaining solid economic growth.
 
    The two-year price fell 2 Canadian cents to yield
0.76 percent and the benchmark 10-year declined 26
Canadian cents to yield 1.712 percent.
    Yields had dipped on Monday as Trump's tough stance on trade
spurred safe-haven demand for bonds.

 (Reporting by Fergal Smith; Editing by Bill Trott)