December 13, 2018 / 8:37 PM / 9 months ago

CANADA FX DEBT-C$ clings to Wednesday's rally amid competing forces

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar near flat against the greenback
    * Price of U.S. oil rises 2.8 percent
    * Canadian new home prices were unchanged in October
    * Canadian bond prices trade mixed across a steeper yield
curve

    By Fergal Smith
    TORONTO, Dec 13 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday, holding onto
the previous day's gains as higher oil prices offset caution on
Wall Street.
    The price of oil, one of Canada's major exports, climbed
after data showed inventory declines in the United States and as
investors began to expect that the global oil market could have
a deficit sooner than they had previously thought.             
    U.S. crude oil futures        settled 2.8 percent higher at
$52.58 a barrel.
    Last week, the Bank of Canada worried about the impact on
the economy of a sharp fall in oil prices since October and
production cuts in Canada's energy sector, as it left interest
rates on hold and suggested the pace of future hikes could be
more gradual.             
    "You have got some modest recovery in oil prices which is
helping to support the Canadian dollar but then at the same time
it looks like still a somewhat cautious broader market mood, and
that's perhaps restraining the Canadian dollar," said Eric
Viloria, an FX strategist at Crédit Agricole CIB in New York.
    U.S. stocks edged lower in volatile trading on Thursday, as
a rally sparked by progress in U.S.-China trade talks faded.
            
    In addition to being a major commodities exporter, Canada
runs a current account deficit, so its economy could be hurt if
the global flow of trade or capital slows.
    At 3:18 p.m. (2018 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3351 to the greenback, or 74.90
U.S. cents. The currency traded in a narrow range of 1.3338 to
1.3383.    
    On Wednesday, the Canadian dollar gained ground against a
broadly weaker greenback. The U.S. dollar        steadied on
Thursday after the European Central Bank promised to maintain
policy support for the euro zone due to risks from trade
tensions, Brexit and budget woes in Italy and France.
            
    In domestic data, new home prices were unchanged in October
for the third month in a row, Statistics Canada said.
            
    Canadian government bond prices were mixed across a steeper
yield curve in sympathy with U.S. Treasuries. The 10-year
            fell 10 Canadian cents to yield 2.146 percent.
    Last Thursday, the 10-year yield touched its lowest in
nearly one year at 2.026 percent.

 (Reporting by Fergal Smith; editing by Grant McCool)
  
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