November 13, 2017 / 9:40 PM / 3 years ago

CANADA FX DEBT-C$ pares some recent gains ahead of NAFTA talks

 (Adds analyst quotes and details, updates prices)
    * Canadian dollar at C$1.2730, or 78.55 U.S. cents
    * 5th round of NAFTA talks due to be held Nov. 17-21
    * Canada's bond market was closed for Remembrance Day

    By Fergal Smith
    TORONTO, Nov 13 (Reuters) - The Canadian dollar pared some
recent gains against its U.S. counterpart on Monday, as
investors turned attention to the resumption of NAFTA
renegotiations and data showed that speculators had cut bullish
bets on the currency.
    As of Nov. 7, Canadian dollar net long positions had slipped
to 50,889 contracts from 57,839 a week earlier, data from the
U.S. Commodity Futures Trading Commission and Reuters
calculations showed.
    In October, bullish bets had reached 76,392 contracts, the
highest in five years.              
    The fifth round of North American Free Trade Agreement
renegotiations is due to be held between Nov. 17 and 21 in
Mexico City.             
    "NAFTA concerns are starting to become more relevant for
currency investors and traders," said Scott Smith, managing
partner at Viewpoint Investment Partners.
    "We will likely see ... somewhat of a negative bias to the
Canadian dollar until there is more certainty around the NAFTA
    Canada sends about 75 percent of its exports to the United
States and its economy could be hurt badly if NAFTA collapses.
    The Bank of Canada worried about trade uncertainties as it
left its benchmark interest rate unchanged at 1 percent in
October, after hiking in July and September for the first time
in seven years.
    Canada's October inflation report, due on Friday, could
reinforce the central bank's more "cautious tone," Smith said.
    Economists expect the annual inflation rate to have cooled
to 1.4 percent from 1.6 percent in September.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading at C$1.2730 to the greenback, or 78.55 U.S. cents, down
0.3 percent.
    The currency traded in a range of C$1.2671 to C$1.2741. On
Friday, it touched its strongest level in more than two weeks at
    Oil, one of Canada's major exports, was supported by Middle
East tensions and record long bets by fund managers.
    U.S. crude futures        settled 2 cents higher at $56.76 a
    But the Canadian dollar was unlikely to recapture its tight
link with the price of oil even as the interest rate outlook
settles, given that crude trades far removed from levels needed
to affect investment in Canada's energy sector, economists and
strategists said.             
    Canada's bond market was closed on Monday to mark
Remembrance Day.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter
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