CANADA FX DEBT-C$ strengthens as oil and stocks climb

Wed Sep 21, 2016 9:47am EDT
 
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* Canadian dollar at C$1.3188, or 75.83 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, Sept 21 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Wednesday as oil
rose and the Bank of Japan's decision to target the yield curve
supported stocks, while investors expected the U.S. Federal
Reserve to leave interest rates on hold.
    U.S. crude prices were up 2.07 percent at $44.96 a
barrel after a surprisingly large drop in U.S. crude inventories
and as an oil services workers strike in Norway threatened to
cut North Sea output. 
    Oil is one of Canada's major exports.
    The BOJ made an abrupt shift to targeting interest rates on
government bonds to achieve its elusive inflation target, after
years of massive money printing failed to jolt the economy out
of decades-long stagnation. 
    The Fed policy decision is awaited later on Wednesday.
Expectations of a rate increase have all but evaporated after
some weak economic data. 
    At 9:32 a.m. EDT (1332 GMT), the Canadian dollar 
was trading at C$1.3188 to the greenback, or 75.83 U.S. cents,
stronger than Tuesday's close of C$1.3209, or 75.71 U.S. cents.
    The currency's strongest level of the session was C$1.3139,
while its weakest was C$1.3204.
    Gains for the loonie came after a speech on Tuesday by Bank
of Canada Governor Poloz that suggested the central bank will
remain on the sidelines even as the economy struggles to gain
traction. 
    In domestic data, the value of Canadian wholesale trade rose
in July for the fourth consecutive month, posting a 0.3 percent
gain on strength in the motor vehicle and parts subsector,
Statistics Canada said. 
    Still, the Organisation for Economic Cooperation and
Development has cut its 2016 growth forecast for Canada to just
1.2 percent, while it warned that global economic growth will
flounder this year and next at rates not seen since the
financial crisis. 
    Canadian government bond prices were lower across the yield
curve, with the two-year bond down 2 Canadian cents
to yield 0.581 percent and the benchmark 10-year 
falling 20 Canadian cents to yield 1.184 percent.
    Canadian inflation and retail sales data are due on Friday.
The annual inflation rate is forecast to have edged up to 1.4
percent in August, while investors will be looking for signs
that the federal government's new child benefit payments boosted
retail sales. 

 (Reporting by Fergal Smith; Editing by Paul Simao)