April 26, 2018 / 8:50 PM / 2 years ago

CANADA FX DEBT-C$ slips as investors assess NAFTA trade talks progress

 (Adds strategist quotes and details on activity, updates
    * Canadian dollar at C$1.2883, or 77.62 U.S. cents
    * Price of oil rises 0.2 percent
    * Bond prices higher across the yield curve
    * 10-year yield touches highest intraday since Feb. 15

    By Fergal Smith
    TORONTO, April 26 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday to approach the
previous day's three-week low, weighed by a cautious Bank of
Canada and as investors assessed the progress of talks to seal a
NAFTA trade deal.
    At 4 p.m. (2000 GMT), the Canadian dollar          was
trading 0.2 percent lower at C$1.2883 to the greenback, or 77.62
U.S. cents.
    The currency traded in a range of C$1.2823 to C$1.2885. On
Wednesday, the loonie touched its weakest point in more than
three weeks at C$1.2897.         
    High-level talks to update the North American Free Trade
Agreement are going slowly, Mexican Economy Minister Ildefonso
Guajardo said, adding the process was "not easy."             
    "My general view is that Canada (dollar) is going to be less
responsive than Mexico (peso) to any NAFTA news," said Alvise
Marino, FX strategist at Credit Suisse in New York.        
    The Bank of Canada's tendency to highlight headwinds for the
economy is the factor most pressuring the loonie, Marino said.
    The Canadian dollar has declined 2.6 percent since the
central bank last week held its benchmark interest rate steady
at 1.25 percent and said it did not know when or how aggressive
it would need to be to keep inflation in check.             
    The U.S. dollar        was boosted by a weaker euro, after
ECB President Mario Draghi hailed "solid" euro zone growth but
kept rates unchanged.                 
    The price of oil, one of Canada's major exports, was
supported by the risk of renewed U.S. sanctions on Iran,
plunging Venezuelan output and robust global demand.
    U.S. crude oil futures        settled 0.2 percent higher at
$68.19 a barrel.
    Canadian average weekly earnings of non-farm payroll
employees rose 3.4 percent in February compared with the same
month last year, led by the accommodation and food services
sectors, Statistics Canada said.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries as buyers emerged
following a week-long selloff spurred by concerns about rising
inflation and growing borrowing by the U.S. government.
    The two-year            rose 3.8 Canadian cents to yield
1.912 percent and the 10-year             climbed 30.3 Canadian
cents to yield 2.353 percent.
    Still, the 10-year yield touched its highest intraday level
since Feb. 15 at 2.379 percent.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
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