June 2, 2017 / 1:48 PM / 4 months ago

CANADA FX DEBT-C$ recovers from 2-week low; trade data offsets oil price slide

    * Canadian dollar at C$1.3512, or 74.01 U.S. cents
    * Loonie touches two-week low at C$1.3547
    * Bond prices lower across yield curve
    * 10-year yield touches 6-month low at 1.382 percent

    By Fergal Smith
    TORONTO, June 2 (Reuters) - The Canadian dollar was little
changed against its broadly weaker U.S. counterpart on Friday,
recovering from an earlier two-week low as data showing a rise
in Canada's exports offset the impact of slumping oil prices.
    Prices of oil, one of Canada's major exports, fell to a
three-week low on worries that U.S. President Donald Trump's
decision to abandon the Paris climate pact could spark more
crude drilling in the United States, worsening a global glut.
     
    U.S. crude        prices were down 1.92 percent at $47.43 a
barrel. 
    Canada's trade deficit in April narrowed to C$370 million as
exports outpaced imports for a second month in a row to hit a
new record high on shipments of motor vehicles and parts,
Statistics Canada said.             
    "Encouragingly, the improvement occurred on the basis of
another strong gain in exports," said Paul Ferley, assistant
chief economist at Royal Bank of Canada.
    Ferley said the export strength coupled with improved
investment in the first quarter would be seen as an encouraging
sign by Canada's central bank.
    In another positive sign for Canada's economy, the labor
productivity of Canadian businesses rose 1.4 percent in the
first quarter, the most in almost three years.             
    At 9:15 a.m. EDT (1315 GMT), the Canadian dollar         
was trading at C$1.3512 to the greenback, or 74.01 U.S. cents,
nearly unchanged.
    The currency's strongest level of the session was C$1.3493
and its weakest was C$1.3547, a level not seen since May 19.
    The Canadian dollar is expected to dip in the short term but
stabilize in 12 months, a Reuters poll has showed, as a
strengthening domestic economy encourages the Bank of Canada to
prepare the market for interest rate hikes.                 
    The U.S. dollar        fell against a basket of major
currencies on Friday after data showed that U.S. job growth
slowed in May.             
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 3 Canadian cents to yield 0.681 percent and the 10-year
            climbed 19 Canadian cents to yield 1.405 percent.
    The 10-year yield touched its lowest intraday level since
Nov. 10 at 1.382 percent. But the gap between it and the U.S.
10-year yield narrowed by 1.5 basis points to a spread of -77.6
basis points as Treasuries outperformed.

 (Reporting by Fergal Smith; Editing by Paul Simao)
  
 

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