January 12, 2018 / 3:01 PM / 5 months ago

CANADA FX DEBT-C$ nearly flat against weaker greenback as oil dips

    * Canadian dollar at C$1.2511, or 79.93 U.S. cents
    * Bond prices fall across the yield curve

    TORONTO, Jan 12 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday as the greenback
broadly fell and the price of oil pared some recent gains, while
investors awaited an interest rate decision from the Bank of
Canada next week.
    The price of oil, one of Canada's major exports, fell after
hitting a three-year high of more than $70 a barrel on Thursday.
            
    U.S. crude        prices were down 0.4 percent at $63.56 a
barrel.
    The U.S. dollar        fell against a basket of major
currencies but made a partial recovery after the Labor
Department said its consumer price index, excluding the volatile
food and energy components, rose 0.3 percent last month, the
biggest advance since January 2017.             
    At 9:43 a.m. EST (1443 GMT), the Canadian dollar         
was up 0.1 percent at C$1.2511 to the greenback, or 79.93 U.S.
cents. The currency traded in a range of C$1.2499 to C$1.2556.
    One week ago, the loonie touched its strongest in three
months at C$1.2355 after much-stronger-than expected jobs data
boosted expectations for a Bank of Canada interest rate hike on
Jan. 17.
    But the currency was rattled this week after Canadian
government sources told Reuters they were increasingly convinced
that the United States planned to announce plans to pull out of
the North American Free Trade Agreement.
    Canada, which sends about 75 percent of its exports to the
United States, welcomes U.S. President Donald Trump's suggestion
that the deadline for concluding talks to modernize NAFTA could
be extended beyond the end of March, Foreign Minister Chrystia
Freeland told reporters.             
    Chances of a rate hike next week had been dented by worries
about NAFTA but have since recovered to about 90 percent, data
from the overnight index swaps market showed.           
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 5 Canadian cents to yield 1.782 percent, and the 10-year
            declined 30 Canadian cents to yield 2.204 percent.
    On Wednesday, the 10-year yield reached 2.231 percent, its
highest intraday since September 2014.

 (Reporting by Fergal Smith; Editing by Lisa Von Ahn)
  
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