August 11, 2017 / 8:57 PM / 3 years ago

CANADA FX DEBT-C$ bounces from 4-week low; bullish bets on C$ rise

    * Canadian dollar at C$1.2683 or 78.85 U.S. cents
    * Bond prices higher across the maturity curve
    * Bullish bets on C$ hit highest level since January 2013

    By Solarina Ho
    TORONTO, Aug 11 (Reuters) - The Canadian dollar rebounded
from a four-week low on Friday against the U.S. dollar, which
weakened after data showed U.S. consumer prices rose less than
expected in July.
    The U.S. data, along with weaker-than-forecast producer
prices earlier this week, could prompt the Federal Reserve to
approach raising interest rates again this year with more
    Greg Anderson, global head of foreign exchange strategy for
BMO Capital Markets in New York, said the data combined with
profit-taking helped bolster the Canadian dollar.
    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. Canadian dollar net long positions rose to 62,821
contracts as of Aug. 8 from 40,638 contracts a week earlier.
    "The trade between Tuesday's close and noon today was the
opposite," said Anderson. "Particularly short-term traders have
been long USD/CAD, so they took a little bit of profit on that."
     At 4:00 p.m. ET (2000 GMT), the Canadian dollar         
was trading at C$1.2684 to the greenback, or 78.84 U.S. cents,
up 0.5 percent.
    The currency, which was on track to fall 0.2 percent on the
week, had retreated to C$1.2753 earlier in the session.
    Anderson said the Canadian dollar would likely continue to
trade between C$1.2550 and C$1.2750 in the near term.
    A slight bump in the price of oil, a major Canadian export,
also provided some support. U.S. crude        prices rose 0.37
percent to $48.77 a barrel in volatile trading, supported by
higher global demand and instability in Nigeria.      
    U.S. President Donald Trump issued a new threat to North
Korea, saying U.S. weapons were "locked and loaded" as Pyongyang
accused him of driving the Korean Peninsula to the brink of
nuclear war.
    As a major commodity producer, Canada could be hurt if
geopolitics hamper global trade.
    Canadian government bond prices were higher across the
maturity curve, with the two-year            price up 2 Canadian
cents to yield 1.21 percent and the benchmark 10-year
            flat to yield 1.852 percent.
    The Canada-U.S. two-year bond spread stood at -8.4 basis
points, while the 10-year spread stood at -33.9 basis points.

 (Reporting by Solarina Ho, additional reporting by Fergal
Smith; Editing by Meredith Mazzilli)
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