January 24, 2019 / 8:41 PM / 8 months ago

CANADA FX DEBT-C$ hits 2-week low on prospects of lower global growth

 (Adds investor quotes and details on activity; updates prices)
    * Canadian dollar dips 0.1 percent against the greenback
    * Loonie touches its weakest since Jan. 7 at 1.3375
    * Price of U.S. oil rises nearly 1 percent
    * Bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, Jan 24 (Reuters) - The Canadian dollar weakened to
its lowest level in more than two weeks against its U.S.
counterpart on Thursday as the greenback broadly climbed and
optimism faded for a near-term resolution to a trade dispute
between the United States and China.
    The United States and China are a long way from resolving
trade issues, but there is a fair chance the two countries will
get to a trade deal, U.S. Commerce Secretary Wilbur Ross said.
            
    Canada exports many commodities, including oil, so its
economy could be hurt if the trade dispute drags on.
    "In a weaker global economy, the U.S. dollar always
strengthens into that and Canada is on the opposite side of that
trade," said Rob Edel, chief investment officer at Nicola Wealth
Management.    
    The U.S. dollar        climbed against a basket of major
currencies after European Central Bank President Mario Draghi
said economic risks have moved to the downside, pressuring the
euro.             
    The price of oil was boosted by the U.S. threat of sanctions
on Venezuela, but gains were capped by record high gasoline
inventories and an unexpected big build in crude stocks in the
United States. U.S. crude oil futures        settled nearly 1
percent higher at $53.13 a barrel.             
    At 3:16 p.m. (2016 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3352 to the greenback, or 74.90
U.S. cents. The currency touched its weakest level since Jan. 7
at 1.3375.
    The 17-day low for the loonie comes after a string of weak
domestic data this week prompted some economists to project a
November contraction in Canada's economy.
    "It (the Canadian dollar) is trading below where you would
expect it to, but based on the trends and this overleveraged
consumer I don't see a lot of momentum for it," Edel said.
    Canadians have taken on record amounts of debt in recent
years, which has helped fuel a rapid rise in real estate prices.
            
    But the housing market has softened since the start of 2018,
weighed by tighter mortgage rules and interest rate hikes from
the Bank of Canada.
    Chances of further tightening by the summer have fallen to
less than 30 percent from more than 50 percent at the end of
last week.           
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
rose 30 Canadian cents to yield 1.935 percent.

 (Reporting by Fergal Smith; 
Editing by Sandra Maler)
  
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