March 21, 2017 / 9:32 PM / 4 months ago

CANADA FX DEBT-C$ flat vs weaker US$ as oil and equity drops weigh

3 Min Read

    * Canadian dollar settles at C$1.3359, or 74.86 U.S. cents
    * Loonie touches its strongest since Feb. 28 before reversal
    * Bond prices higher across the yield curve

    By Alastair Sharp
    TORONTO, March 21 (Reuters) - The Canadian dollar ended
little changed against a broadly weaker U.S. counterpart on
Tuesday and fell against other major currencies as lower oil
prices and sharp stock market falls weighed. 
    The loonie, as Canada's currency is colloquially known, had
hit its strongest level in three weeks in morning trade after
the release of stronger-than-expected domestic retail sales.
    "It feels like it's weak even though it's flat," said David
Bradley, director of foreign exchange trading at Scotiabank. "If
you look at it from the crosses, euro-Canada or sterling-Canada,
they've rallied significantly today."
    Prices for oil, one of Canada's major exports, fell as fresh
glut fears pushed U.S. crude to its lowest since November.
            
    The Canadian dollar          settled at C$1.3359 to the
greenback, or 74.86 U.S. cents, barely weaker than Monday's
close of C$1.3354, or 74.88 U.S. cents and just off its weakest
intraday level.
    It had touched its strongest since Feb. 28 at C$1.3265,
after Canadian retail sales rebounded in January with the
largest gain in nearly seven years. The 2.2 percent increase
topped economists' expectations for a gain of 1.1 percent, while
volumes were also robust, up 1.3 percent.
    Recent signs of long-awaited strengthening of domestic
economic growth probably came too late to help Finance Minister
Bill Morneau trim yawning annual deficits when the federal
budget is released on Wednesday.             
    The U.S. dollar        sunk to a six-week low against a
basket of major currencies after centrist Emmanuel Macron's
performance in a television debate raised expectations he would
win France's presidential election over the far-right's Marine
Le Pen, boosting the euro.             
    The Bank of Canada remains concerned about tepid business
investment, a key official said, adding it is too early to
assume the worst of underperformance is over despite
stronger-than-expected economic growth recently.             
    North American stock markets fell sharply as investors acted
on concerns about how quickly the Trump administration can
implement pro-growth policies.  
    Canadian government bond prices rose across the yield curve,
with the two-year            up half a Canadian cent to yield
0.79 percent and the 10-year             rising 21.5 Canadian
cents to yield 1.702 percent.           
    Canada's inflation report for February is due on Friday.
           

 (Additional reporting by Fergal Smith; Editing by Nick
Zieminski and Sandra Maler)
  
 

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