May 10, 2018 / 9:02 PM / 2 years ago

CANADA FX DEBT-C$ climbs to 3-week high, boosted by higher oil prices

 (Adds strategist quotes and details on activity; updates
    * Canadian dollar at C$1.2763, or 78.35 U.S. cents
    * Loonie hits strongest since April 20 at C$1.2743
    * Bond prices lower across flatter yield curve

    By Fergal Smith
    TORONTO, May 10 (Reuters) - The Canadian dollar strengthened
to a nearly three-week high against its U.S. counterpart on
Thursday as oil prices climbed and prospects improved for
greater deal making in Canada's energy sector.
    The price of oil, one of Canada's major exports, was
supported by potential disruption to oil flows from major
exporter Iran in the face of U.S. sanctions.                   
    U.S. crude oil futures        settled 0.3 percent higher at
$71.36 a barrel. They have rallied more than 5 percent from
Tuesday's low.
    "Oil is what's driving the Canadian dollar at the moment,"
said Adam Button, currency analyst at ForexLive. "Today it is
not just higher oil prices but there are indications of deal
making in the energy industry."
    Enbridge Inc         , a major Canadian oil pipeline
company, may sell more assets than expected this year, seeing
strong interest from potential buyers after achieving a goal
this week for 2018 divestitures.                 
    Crude has been trading far removed from levels needed to
affect investment in Canada's energy sector. But that could
change as oil moves above $70 a barrel.             
    At 4 p.m. EST (2000 GMT), the Canadian dollar          was
trading 0.7 percent higher at C$1.2763 to the greenback, or
78.35 U.S. cents. The currency touched its strongest level since
April 20 at C$1.2743.
    The loonie has rebounded as much as 2 percent since hitting
on Tuesday a nearly seven week low at C$1.2998.     
    The U.S. dollar        fell on Thursday against a basket of
major currencies, holding below its 2018 peak, as a
smaller-than-expected rise in consumer prices caused traders to
pare positions betting that inflation is accelerating, which
could push the Federal Reserve to hike interest rates faster.
    Canadian new home prices were unchanged in March, as
expected, as higher prices in Ottawa were offset by a weaker
Toronto market, data from Statistics Canada showed.
    Canadian government bond prices were lower across a flatter
yield curve, with the two-year            down 3.5 Canadian
cents to yield 1.977 percent and the 10-year             falling
4 Canadian cents to yield 2.398 percent.
    The 10-year yield touched its highest intraday since May
2014 at 2.411 percent.
    Canada's jobs report for April is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
David Gregorio)
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