CANADA FX DEBT-C$ dips as boost from U.S. presidential debate fades

Wed Sep 28, 2016 10:16am EDT
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* Canadian dollar at C$1.3218, or 75.65 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, Sept 28 (Reuters) - The Canadian dollar weakened
slightly against its U.S. counterpart on Wednesday despite
higher oil prices as a boost from the U.S. presidential debate
    A view that Democratic U.S. presidential candidate Hillary
Clinton fared better than rival Donald Trump in a television
debate supported Mexico's peso and the Canadian dollar on
Tuesday. Both countries have strong trade ties to the United
    Trump has said he would renegotiate or scrap the North
American Free Trade Agreement if he is elected.
    Markets were looking ahead to an appearance by U.S. Federal
Reserve Chair Janet Yellen and a meeting of oil producers in
Algiers. Crude is a major Canadian export.
    U.S. crude prices were up 1.12 percent at $45.17 a
barrel after sharp losses in the previous session, as industry
data showed a surprise draw in U.S. crude stocks, although
worries over a lack of agreement among producers to curb output
kept a lid on gains. 
    At 10:01 a.m. EDT (1401 GMT), the Canadian dollar 
was trading at C$1.3218 to the greenback, or 75.65 U.S. cents,
slightly weaker than Tuesday's close of C$1.3203, or 75.74 U.S.
    The currency's strongest level of the session was C$1.3195,
while its weakest was C$1.3235.
    On Tuesday, the loonie touched its weakest intraday level in
nearly six months at C$1.3281, following dovish comments by Bank
of Canada Governor Stephen Poloz on Monday evening.
    Still, the currency ended up 0.3 percent on Tuesday.
    Canadian policymakers are facing increased pressure to
support the country's lackluster economy as infrastructure
spending takes time to kick in and record high debt loads dampen
the impact of stimulus checks. 
    On Wednesday, the U.S. government reported that U.S. core
capital goods orders rose for the third straight month in
August, a positive signal for the business investment outlook.
    A pickup in U.S. business investment would improve the
outlook for Canada's non-energy exports. 
    Canadian government bond prices were mixed across the yield
curve, with the two-year down 0.5 Canadian cent to
yield 0.500 percent and the benchmark 10-year 
falling 3 Canadian cents to yield 0.97 percent.
    Still, the 10-year yield earlier touched a new historic low
intraday at 0.915 percent.
    Canada's gross domestic product data for July is due on
Friday. The economy is expected to have grown by 0.3 percent,
which would reinforce expectations that it rebounded in the
third quarter after contracting in the second. 

 (Reporting by Fergal Smith Editing by W Simon)