August 2, 2018 / 8:43 PM / 2 months ago

CANADA FX DEBT-C$ holds its ground versus broadly stronger greenback

 (New throughout)
    * Canadian dollar at C$1.3017, or 76.82 U.S. cents
    * Price of U.S. oil rises 1.9 percent
    * Bond prices mixed across the yield curve
    * 2-year spread hits its narrowest since June 8

    By Fergal Smith
    TORONTO, Aug 2 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday as higher oil
prices and the strength of recent domestic data helped support
the currency even as the greenback broadly climbed.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.3017 to the greenback, or 76.82
U.S. cents. The currency traded in a narrow range of C$1.2996 to
C$1.3039.
    On Wednesday, the loonie touched its strongest level in
nearly seven weeks at C$1.2975. It was boosted by signs of
progress in talks to update the North American Free Trade
Agreement and recent domestic data that has added to bets for
another interest rate hike this year from the Bank of Canada.
                          
    "The domestic fundamentals look really good right now and
the market is looking at the CAD as more of a lower beta play in
a risk-off environment," said Bipan Rai, executive director and
North America head, FX strategy at CIBC Capital Markets.
    Low beta assets tend to be less volatile than the overall
market.
    The U.S. dollar        rose to the highest in nearly two
weeks against a basket of currencies, as a flare-up in trade
tensions between the United States and China drove traders to
buy the U.S. currency.             
    The price of oil, one of Canada's major exports, rose after
traders saw an industry report suggesting domestic crude
stockpiles would soon decline. U.S. crude oil futures       
settled 1.9 percent higher at $68.96 a barrel.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            down 0.5 Canadian cent to
yield 2.091 percent and the 10-year             rising 4
Canadian cents to yield 2.365 percent.
    The gap between the two-year yield and its U.S. counterpart
narrowed by 2.1 basis points to a spread of 57.4 basis points in
favor of the U.S. bond, its narrowest since June 8.
    Canada's trade data for June is due on Friday.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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