August 10, 2017 / 9:10 PM / 3 years ago

CANADA FX DEBT-C$ falls as oil prices slump, Wall St suffers

 (Adds trader comment, updates prices)
    * Canadian dollar at C$1.2741, or 78.49 U.S. cents
    * Loonie touches its weakest since July 14
    * Bond prices move higher across yield curve

    By Alastair Sharp
    TORONTO, Aug 10 (Reuters) - The Canadian dollar hit a fresh
four-week low against a broadly weaker U.S. currency on
Thursday, hurt by sharp losses on Wall Street and a fall in the
price of oil as U.S.-North Korea tensions escalated.
    The S&P 500 index had its biggest one-day drop since May as
investors fled riskier assets, while prices for oil, a major
Canadian export, fell more than 1.5 percent.
    U.S. President Donald Trump ratcheted up his rhetoric toward
North Korea, saying it should be "very, very nervous" if it even
thinks about attacking the United States or its allies, after
Pyongyang said it was making plans to fire missiles over Japan
to land near the U.S. Pacific territory of Guam.             
    As a major commodity producer, Canada could be hurt if
geopolitics hampers global trade.
    At 4 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2741 to the greenback, or 78.49 U.S. cents, down
0.4 percent and its weakest since July 14.
    That come even as the greenback hit an eight-week low
against the Japanese yen and other currencies seen as safe
    The loonie has pulled back against the U.S. currency in
recent weeks after hitting its strongest since mid-2015 at
C$1.2414 late last month as investors adjusted to a more hawkish
turn from the Bank of Canada. 
    But the weakness could be hitting its limit.
    "I'd be surprised to see us trade through C$1.30 anytime in
the near future," said Steve Butler, director of foreign
exchange trading at Scotiabank. "You're still going to find
demand for Canadian dollars" particularly from exporters, he
    New housing prices in Canada rose less than expected in June
as the Toronto market was unchanged for the first time in six
months following provincial government measures to rein in
gains, data from Statistics Canada showed.             
    Investors worry that a cooling in the housing market could
weigh on Canada's economy and slow the pace of additional
interest rate hikes.
    Canadian government bond prices were higher across the yield
curve, with the benchmark 10-year             bond rising 46
Canadian cents to yield 1.853 percent and the two-year adding
3.5 Canadian cents to yield 1.223 percent.

 (Additional reporting by Fergal Smith; Editing by W Simon and
Chris Reese)
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