June 28, 2018 / 1:52 PM / 3 months ago

CANADA FX DEBT-C$ gets boost from increased odds of July rate hike

    * Canadian dollar at C$1.3295, or 75.22 U.S. cents
    * Chance of Bank of Canada July rate hike rises to 65 pct
    * Bond prices lower across much of a flatter yield curve

    TORONTO, June 28 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Thursday, supported
by a recent increase in oil prices and as investors added to
bets for a Bank of Canada interest rate hike next month.
    At 9:27 a.m. EDT (1327 GMT), the Canadian dollar         
was trading 0.3 percent higher at C$1.3295 to the greenback, or
75.22 U.S. cents. The currency traded in a range of C$1.3275 to
C$1.3351.
    On Wednesday, a dovish speech and a hawkish news conference
from Bank of Canada Governor Stephen Poloz whipsawed the
Canadian dollar to a one-year low at C$1.3386 before it
recovered ground.             
    Chances of a rate increase at the July 11 announcement have
increased to 65 percent from 55 percent before the central bank
governor's speech, data from the overnight index swaps market
showed.                   
    Investors are likely to pay close attention to the Bank of
Canada Business Outlook Survey and the April report for gross
domestic product, both due on Friday, after Poloz reiterated the
central bank's data dependence.   
    The price of oil, one of Canada's major exports, steadied
near a 3-1/2-year high, but supply remained tight with investors
concerned by the prospect of a big fall in crude exports from
Iran due to U.S. sanctions.             
    U.S. crude oil futures        were little changed at $72.73
a barrel.   
    Pressure on world shares from a U.S.-driven trade dispute
mounted, as a fast-charging dollar and a jump in oil prices also
cranked up the pain in emerging markets.             
    Canada runs a current account deficit so its economy could
be hurt if the flow of trade or capital slows.
    The country also has its own trade dispute with the United
States and is in slow-moving talks to revamp the North American
Free Trade Agreement.
    Canadian government bond prices were lower across much of a
flatter yield curve, with the 10-year             falling 7
Canadian cents to yield 2.099 percent.
    On Wednesday, the 10-year yield touched its lowest intraday
since Jan. 4 at 2.056 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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