August 9, 2018 / 1:52 PM / 2 years ago

CANADA FX DEBT-C$ steadies as Saudi Arabia reassures Canadian oil customers

    * Canadian dollar at C$1.3022, or 76.79 U.S. cents
    * Price of U.S. oil rises 0.7 percent
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, Aug 9 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday as oil prices
rose after a deep slide the day before and Saudi Arabia said its
oil customers in Canada will not be affected by a diplomatic
    A row over human rights in Saudi Arabia will not have any
impact on Saudi oil supplies to Canada, its energy minister
said, reassuring customers after Riyadh froze new trade with
Canada and ruled out mediation efforts.             
    The loonie was buffeted on Wednesday by the diplomatic
dispute, hitting a two-week low at C$1.3121. But it recovered as
investors decided that potential Canadian asset sales by Saudi
Arabia will have a short-lived impact on the currency.
    "It appears that Saudi threats to dump Canadian assets are
being taken in stride," Robert Kavcic, a senior economist at BMO
Capital Markets, said in a research note.
    The price of oil, one of Canada's major exports, rose on
Thursday after the first round of U.S. sanctions against Iran
came into effect, although confidence in crude demand has been
hit by an escalating China-U.S. trade dispute.             
    U.S. crude        prices were up 0.7 percent at $67.38 a
    At 9:27 a.m. EDT (1327 GMT), the Canadian dollar         
was nearly unchanged at C$1.3022 to the greenback, or 76.79 U.S.
cents. The currency traded in a range of C$1.3001 to C$1.3048.  
    Canada's dollar will rise over the coming year as the Bank
of Canada hikes interest rates and higher oil prices become more
supportive of the currency, a Reuters poll showed, but it will
take a deal on the North American Free Trade Agreement to
trigger bigger gains.             
    Canadian new housing prices rose by 0.1 percent in June, the
first gain in seven months, largely due to higher construction
costs across the country, Statistics Canada said.             
    Separate data showed that Canadian seasonally adjusted
housing starts fell to 206,314 in July from a revised 246,200
units in June.             
    Canada's jobs data for July is due on Friday.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries as U.S. data showed
producer prices were unchanged in July.             
    The 10-year             rose 22 Canadian cents to yield
2.335 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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