April 10, 2018 / 1:32 PM / in 12 days

CANADA FX DEBT-C$ hits six-week high as trade tensions ebb, oil climbs

    * Canadian dollar at C$1.2658, or 79.00 U.S. cents
    * Loonie touches its strongest since Feb. 26 at C$1.2651
    * The price of oil rises 1.8 percent
    * Bond prices lower across the yield curve

    TORONTO, April 10 (Reuters) - The Canadian dollar
strengthened to a six-week high against its U.S. counterpart on
Tuesday as higher oil and stock prices signaled easing investor
concerns about an escalating U.S.-China trade row.
    Investor optimism grew that a trade dispute between the
United States and China might be resolved without greater damage
to the global economy after President Xi Jinping promised to
open China's economy further and lower import tariffs on
products including cars.             
    Canada's commodity-linked economy could be hurt if global
trade slows.
    U.S. crude        prices were up 1.8 percent to $64.55 a
barrel, building on Monday's rally.             
    At 9:15 a.m. EDT (1315 GMT), the Canadian dollar         
was trading 0.3 percent higher at C$1.2658 to the greenback, or
79.00 U.S. cents. The currency touched its strongest level since
Feb. 26 at C$1.2651.    
    Gains for the loonie came after the Bank of Canada said in a
report on Monday that Canadian companies remained optimistic
about sales growth despite trade uncertainties.
    Last week, stronger-than-expected domestic jobs data and
investor optimism over a deal to revamp the North American Free
Trade Agreement helped boost the loonie by 0.9 percent.
    The Canadian government said it was considering all options
on the Trans Mountain pipeline expansion, including a possible
investment of public funds to ensure construction goes ahead.
                
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 3.5 Canadian cents to
yield 1.815 percent and the 10-year             falling 27
Canadian cents to yield 2.176 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 2.4 basis points to a spread of -62.1
basis points.
    The value of Canadian building permits dipped by 2.6 percent
in February, in part due to lower construction intentions for
single-family homes in Ontario, Statistics Canada said.
                     

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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