November 16, 2017 / 9:30 PM / 5 months ago

CANADA FX DEBT-C$ edges higher, boosted by manufacturing sales gain

 (Adds strategist comment and details on yield spreads and
ultra-long bond auction; updates prices)
    * Canadian dollar at C$1.2756, or 78.39 U.S. cents
    * Manufacturing sales rise 0.5 percent in September
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Nov 16 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday as data showing a
surprise rise in domestic manufacturing sales in September
offset lower oil prices.
    The 0.5 percent increase in manufacturing sales topped
economists' forecasts for a 0.3 percent decline, while volumes
rose 0.7 percent.             
    Separate domestic data showed that foreign investors bought
a net C$16.81 billion in Canadian securities in September.
            
    The firm data and a reduced gap between the yields on
Canadian and U.S. government debt boosted the Canadian dollar,
said Greg Anderson, global head of foreign exchange strategy at
BMO Capital Markets in New York.
    The gap between Canadian and U.S. 10-year yields narrowed by
1.7 basis points to a spread of -40.3 basis points.
    Prices of oil, one of Canada's major exports, ended lower
again on increased concerns about growth in U.S. production and
inventories.             
    U.S. crude        prices settled 0.3 percent lower at $55.14
a barrel.
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading at C$1.2756 to the greenback, or 78.39 U.S. cents, up
0.1 percent.
    The currency traded in a range of C$1.2729 to C$1.2785.
    Investors have also been focusing this week on the
resumption of North American Free Trade Agreement (NAFTA)
renegotiations. NAFTA working groups began meeting on Wednesday
in Mexico. Talks will begin on Friday and continue through Nov.
21.
    On Wednesday, Bank of Canada Senior Deputy Governor Carolyn
Wilkins said a cautious approach to monetary policy may be
prudent during times of uncertainty like today, but caution has
its limits because the trade-off can be financial instability.
            
    The Canadian labor market lost momentum in October, a new
report showed on Thursday, though traders panned the data and
analysts said it did not change their outlook for job growth,
which has been strong this year.             
    Canadian government bond prices were lower across the yield
curve after the firm domestic data and as risk appetite
recovered globally.
    The two-year            fell 6 Canadian cents to yield 1.480
percent and the 10-year             declined 47 Canadian cents
to yield 1.972 percent.
    Canada sold C$500 million of its ultra-long bonds at a 2.251
percent yield, the Bank of Canada said after an auction.
             
    The country's inflation report for October will be released
on Friday.

 (Reporting by Fergal Smith; Editing by Susan Thomas)
  
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