July 26, 2018 / 1:39 PM / 4 months ago

CANADA FX DEBT-C$ dips, consolidating gains linked to trade optimism

    * Canadian dollar at C$1.3054, or 76.60 U.S. cents
    * Bond prices higher across a flatter yield curve
    * Canada-U.S. 10-year spread widens by 3.5 basis points

    TORONTO, July 26 (Reuters) - The Canadian dollar edged lower
against the greenback on Thursday, consolidating its gains
driven by trade optimism from the day before, as data pointing
to solid U.S. business spending boosted the greenback.
    The U.S. dollar        rebounded from a two-week low
intraday against a basket of major currencies after data showed
new orders for key U.S.-made capital goods increased more than
expected in June and shipments surged.             
    At 9:21 a.m. EDT (1321 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.3054 to the greenback, or
76.60 U.S. cents. 
    On Wednesday, the currency touched its strongest in nearly
six weeks at C$1.3025 after Canadian and Mexican policymakers
said they were optimistic about prospects for the North American
Free Trade Agreement and a breakthrough in U.S.-EU trade talks.
                        
    Canada runs a current account deficit, so its economy could
be hurt if the flow of trade or capital slows.
    The loonie touched the C$1.3025 level again on Thursday,
while its weakest was C$1.3061.    
    U.S. crude oil futures        dipped 0.1 percent to $69.25 a
barrel even as Saudi Arabia suspended its oil shipments through
a Red Sea strait in response to an attack on two of the
country's tankers.             
    Oil is one of Canada's major exports.
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 1 Canadian cent to
yield 2.055 percent and the 10-year             rising 10
Canadian cents to yield 2.285 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened 3.5 basis points to a spread of 67.5 basis
points in favor of the U.S. bond.        

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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