August 13, 2018 / 7:36 PM / 3 months ago

CANADA FX DEBT-C$ hits near 3-week low as Turkish lira's fall shakes markets

    * Canadian dollar at C$1.3145, or 76.07 U.S. cents
    * Loonie touches its weakest intraday since July 24 at
C$1.3179
    * Price of U.S. oil falls 0.6 percent
    * Bond prices were mixed across the yield curve

    By Fergal Smith
    TORONTO, Aug 13 (Reuters) - The Canadian dollar weakened to
a nearly three-week low against its U.S. counterpart on Monday
as fallout from the Turkish lira's crash rippled through asset
markets.
    World markets shuddered as Turkey's currency crisis prompted
 investors to dump equities and emerging market assets for
safe-haven currencies such as the greenback and the Japanese
yen. The loonie's movement was less wild than some other
currencies but it still touched its weakest since July 24 before
paring its losses.             
    Canada exports many commodities and runs a current account
deficit so its economy could be hurt if the flow of trade or
capital slows. A diplomatic row between Saudi Arabia and Canada
in recent days has added to pressure on the loonie.
    For years, Canadian pressure on human rights in Saudi Arabia
had elicited no more than a standard rejection. But all that
changed last week, when a Canadian complaint was translated into
Arabic and set off a diplomatic row.              
    The prospect of Saudi Arabia selling Canadian assets and
safe-haven demand for the U.S. dollar "have really taken the
starch out of Canada," said Michael Goshko, corporate risk
manager at Western Union Business Solutions. "The U.S. has been
king of the hill for a number of days now and there is just no
pushing that tide back."
    The greenback        notched its strongest in more than 13
months against a basket of major currencies.
    The price of oil, one of Canada's major exports, was
pressured by worries that troubled emerging markets and trade
tensions will dent demand and data suggesting inventories at the
U.S. crude delivery hub rose in the latest week.             
    U.S. crude oil futures        settled 0.6 percent lower at
$67.20 a barrel.
    At 3:07 p.m. EDT (1907 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.3145 to the greenback, or
76.07 U.S. cents. The currency hit a session low of C$1.3179.
    Still, recent data has pointed to strengthening of Canada's
economy and has showed that speculators have cut bearish bets on
the country's currency.             
    The move lower for the loonie "seems to be driven more by
external factors than by the overall domestic economy," Goshko
said.
    Canadian government bond prices were mixed across the yield
curve, with the 10-year             rising 2 Canadian cents to
yield 2.300 percent.
    Canada's July inflation report is due on Friday.

 (Reporting by Fergal Smith; Editing by David Gregorio and Susan
Thomas)
  
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