February 9, 2017 / 2:45 PM / 6 months ago

CANADA FX DEBT-C$ tracks oil prices higher ahead of central banker speech

3 Min Read

    * Canadian dollar at C$1.3109, or 76.28 U.S. cents
    * Bond prices lower across the yield curve

    TORONTO, Feb 9 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday as oil prices rose and
ahead of a speech by Bank of Canada Deputy Governor Lawrence
Schembri on inflation.
    U.S. crude        prices were up 1.17 percent at $52.95 a
barrel, supported by an unexpected draw in U.S. gasoline
inventories.      
    Oil is one of Canada's major exports.
    Investors will look to Schembri's speech for insight as to
how the Bank of Canada has been interpreting its three new
measures of core inflation. The central bank will release his
prepared remarks at 11:20 a.m. ET (1620 GMT).
    At 9:11 a.m. ET (1411 GMT), the Canadian dollar          was
trading at C$1.3109 to the greenback, or 76.28 U.S. cents,
stronger than Wednesday's close of C$1.3155, or 76.02 U.S.
cents.
    The currency traded in a range of C$1.3105 to C$1.3167,
having rebounded from its weakest in two weeks on Tuesday of
C$1.3213.
    The recent move lower in U.S. Treasury yields has weighed on
the greenback, limiting pressure on the Canadian dollar, said   
RBC Capital Markets in a research note.
    Investors are also wary that U.S. President Donald Trump may
reiterate his opposition to a strong U.S. dollar at a meeting
with Japanese Prime Minister Shinzo Abe on Friday.             
    Trump has also said he plans to renegotiate the North
American Free Trade Agreement, threatening Canada's economy.
    Canada sends the bulk of its exports to the United States.
    On Wednesday, Canada's foreign minister, Chrystia Freeland,
said that Canada opposes the idea of the United States imposing
new border tariffs and would respond to any such move.
            
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as the number of
Americans filing for unemployment benefits unexpectedly fell
last week to near a 43-year low.             
    The two-year            fell 2.5 Canadian cents to yield
0.736 percent and the 10-year             declined 25 Canadian
cents to yield 1.649 percent.
    On Wednesday, the 10-year yield touched a two-month low at
1.607 percent.        
    In domestic data, new home prices rose 0.1 percent in
December from the previous month, Statistics Canada said.
            
    Canada's employment report for January is due on Friday. The
job market is expected to be unchanged after 2016's strong
second half.         

 (Reporting by Fergal Smith Editing by W Simon)
  
 

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