July 5, 2017 / 9:03 PM / 22 days ago

CANADA FX DEBT-C$ pulls back from 10-month high as oil prices slide

3 Min Read

 (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar at C$1.2968, or 77.11 U.S. cents
    * Bond prices higher across a flatter yield curve
    * 2-year yield posts its highest since September 2014

    By Fergal Smith
    TORONTO, July 5 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday, pulling back from a
nearly 10-month high the day before, as oil prices tumbled and
investors braced for domestic jobs data due later in the week.
    The loonie had rallied in six of the seven previous
sessions, boosted by rising expectations that the Bank of Canada
will raise interest rates as early as next week.             
    "The rally in the Canadian dollar has been somewhat halted
today" by the "jolt" to oil prices, said Darren Richardson,
senior corporate dealer at CanadianForex.
    Oil prices        retreated about 4 percent, ending their
longest bull run in more than five years, as climbing exports
from the Organization of the Petroleum Exporting Countries
turned sentiment more bearish.             
    Oil is one of Canada's major exports.        
    "Volatility (in the currency) should be subdued until Friday
when we have Canadian unemployment figures. But overall, markets
are really focusing on the Bank of Canada rate decision on the
12th," Richardson said.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.2968 to the greenback, or 77.11 U.S. cents, down
0.2 percent.
    The currency traded in a range of C$1.2930 to C$1.3015.
    On Tuesday, the loonie touched its strongest since September
at C$1.2912 as Bank of Canada Governor Stephen Poloz added more
support to the view the central bank will hike next week for the
first time since 2010.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries after U.S. data
showed factory goods orders dropped 0.8 percent in May.
    The two-year            rose 2 Canadian cents to yield 1.129
percent and the 10-year             climbed 39 Canadian cents to
yield 1.794 percent.
    Earlier in the session, the 2-year yield reached its highest
since September 2014 at 1.148 percent.
    Canada's trade data for May is due on Thursday and the June
employment report is due on Friday.          

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Lisa
Shumaker)
  
 

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