February 15, 2017 / 2:53 PM / 9 months ago

CANADA FX DEBT-C$ weakens as oil prices fall, greenback climbs

    * Canadian dollar at C$1.3106, or 76.30 U.S. cents
    * Bond prices lower across the yield curve
    * 10-year yield touches a two-week high at 1.801 percent

    TORONTO, Feb 15 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday as a drop in oil
prices and broader gains for the greenback offset
stronger-than-expected domestic manufacturing data.
    Canadian manufacturing sales jumped for the second month in
a row in December as firms sold higher amounts of transportation
equipment and petroleum products at the end of the year, data
from Statistics Canada showed.                 
    The 2.3 percent increase exceeded economists' expectations
for a gain of 0.2 percent, while volumes also rose 2.3 percent. 
    The U.S. dollar        padded its gains against a basket of
major currencies on stronger-than-expected inflation and retail
sales data, with a hawkish tone from Federal Reserve Chair Janet
Yellen one day before also underpinning the greenback.    
    U.S. crude        prices were down 0.1 percent at $53.17 a
barrel as an industry report showing a large rise in U.S. crude
inventories signaled ample supply.      
    Oil is one of Canada's major exports.
    At 9:26 a.m. EST (1426 GMT), the Canadian dollar         
traded at C$1.3106 to the greenback, or 76.30 U.S. cents, weaker
than Tuesday's close of C$1.3071, or 76.51 U.S. cents.
    The currency traded in a range of C$1.3066 to C$1.3120.
    The loonie got a boost on Monday after U.S. President Donald
Trump said he only wants to tweak trade ties with Canada.
            
    Still, Trump's pledge to renegotiate the North American Free
Trade Agreement (NAFTA) to focus on Mexico is almost impossible
and Canada will not emerge unscathed, Canadian officials and
trade experts said.             
    Canada sends 75 percent of its exports to the United States.
    A proposed U.S. border adjustment tax would reduce Canada's
real gross domestic product by almost 1 percent, the C.D. Howe
Institute said in a research report on Tuesday.
    In other domestic data, resales of Canadian homes fell 1.3
percent in January from December, a report from the Canadian
Real Estate Association showed.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries on the firm
economic data. The two-year            dipped 2.5 Canadian cents
to yield 0.812 percent, and the 10-year             declined 27
Canadian cents to yield 1.797 percent.
    The 10-year yield touched its highest intraday since Feb. 1
at 1.801 percent.
    The European Union and Canada secured clearance on Wednesday
for their contentious free trade deal and the removal of import
duties.             

 (Reporting by Fergal Smith; Editing by Jeffrey Benkoe)
  
 

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