August 8, 2017 / 1:55 PM / 3 years ago

CANADA FX DEBT-C$ hovers near a 3-week low as oil falls

    * Canadian dollar at C$1.2679, or 78.87 U.S. cents
    * Bond prices nearly flat across the yield curve

    By Fergal Smith
    TORONTO, Aug 8 (Reuters) - The Canadian dollar steadied on
Tuesday against its U.S. counterpart, holding near a three-week
low set the day before, as oil prices fell and data showed
slower Chinese and German trade growth.
    U.S. crude        prices were down 0.63 percent at $49.08 a
barrel as high oil production in many parts of the world offset
news of lower crude supplies from Saudi Arabia.             
    Oil is one of Canada's major exports.
    Chinese and German trade data disappointed, suggesting
global demand may be starting to flag just as central banks
contemplate scaling back stimulus.             
    Slower global demand could weigh on commodity-linked
currencies, such as the Canadian dollar.
    At 9:34 a.m. EDT (1334 GMT), the Canadian dollar         
was trading nearly unchanged at C$1.2679 to the greenback, or
78.87 U.S. cents.
    The currency traded in a range of C$1.2652 to C$1.2689. On
Monday, when Canada's stock and bond markets were closed for a
public holiday, the loonie touched its weakest since July 14 at
    Domestic data on Friday had showed employment growth in July
that kept expectations alive for another interest rate hike in
the coming months, but also a jump in the trade deficit.
    The trade data "point to the need for a weaker C$," Benjamin
Reitzes, senior economist and foreign exchange strategist at BMO
Capital Markets said in a research note.
    Speculators have increased bullish bets on the loonie to the
highest level since January 2013, according to data from the
U.S. Commodity Futures Trading Commission and Reuters
calculations on Friday.             
    Canadian government bond prices were nearly flat across the
yield curve with the two-year            down 1 Canadian cent to
yield 1.243 percent and the 10-year             unchanged to
yield 1.921 percent.
    The 10-year yield fell 1.4 basis points further below its
U.S. equivalent to a spread of -35.0 basis points. It had
touched at the end of July its narrowest since October 2014 at
-23.6 basis points.
    Domestic housing data is awaited this week. Reports on
housing starts for July and building permits for June are due on
Wednesday while the June new housing price index is set for

 (Reporting by Fergal Smith; Editing by Bill Trott)
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