May 9, 2018 / 8:47 PM / in 3 months

CANADA FX DEBT-C$ rises from 7-week low as oil surge offsets NAFTA uncertainty

 (Adds strategist quote and details on market activity, updates
prices)
    * Canadian dollar at C$1.2856, or 77.78 U.S. cents
    * Price of oil rises 3 percent
    * Bond prices lower across steeper yield curve
    * 10-year yield touches highest since Feb. 8 at 2.405
percent

    By Fergal Smith
    TORONTO, May 9 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday, rebounding from a
nearly seven-week low the day before, as a jump in oil prices
countered uncertain prospects for talks on revamping the NAFTA
trade pact.
    At 4 p.m. (2000 GMT), the Canadian dollar          was
trading 0.8 percent higher at C$1.2856 to the greenback, or
77.78 U.S. cents.
    The currency traded in a range of C$1.2826 to C$1.2975. On
Tuesday, it touched its weakest level since March 21 at
C$1.2998.
    "There is still NAFTA uncertainty lingering, but the higher
oil prices are helping the Canadian dollar," said Eric Viloria,
a currency strategist at Wells Fargo.
    U.S. crude oil futures        settled 3 percent higher after
a bigger-than-expected drawdown in U.S. oil inventories extended
gains from the U.S. decision to quit a nuclear deal with Iran.
            
    Oil is one of Canada's major exports.
    Mexico has launched a counterproposal to U.S. demands to
toughen automotive industry content rules under the North
American Free Trade Agreement, officials said on Tuesday, as
ministers again pushed for a deal to rework the 24-year-old
accord.             
    Canada sends 75 percent of its exports to the United States.
Its economy could benefit if a deal to revamp NAFTA is reached.
    The value of Canadian building permits rose 3.1 percent in
March, more than economists' forecasts for a gain of 2.0
percent, on increased plans to build apartment buildings in the
provinces of Quebec and British Columbia, data from Statistics
Canada showed.             
    Canadian government bond prices were lower across a steeper
yield curve as the yield on the benchmark U.S. government note
rose back above the psychologically significant level of 3
percent.             
    Canada's 10-year bond             declined 33 Canadian cents
to yield 2.391 percent. The yield touched its highest intraday
level since Feb. 8 at 2.405 percent.
    Canada's jobs report for April is due on Friday.

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