January 25, 2019 / 2:38 PM / 6 months ago

CANADA FX DEBT-C$ rebounds from two-week low as investor optimism rises

    * Canadian dollar rises 0.6 percent against greenback
    * Price of U.S. oil rises 0.3 percent
    * Loonie on track to dip 0.1 percent for the week
    * Canadian bond prices fall across yield curve

    TORONTO, Jan 25 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday, rebounding from a
more-than two-week low the day before, as oil prices rose and
investors turned more bullish on stocks.
    Global stocks rose as strong earnings helped to underpin
investor sentiment in the face of growing signs that the global
economy is slowing and a still unresolved trade dispute between
the United States and China.             
    Canada runs a current account deficit and exports many
commodities, including oil, so its economy could benefit from an
improved outlook for the global flow of trade or capital.
    U.S. crude oil futures        were up 0.3 percent at $53.27
a barrel despite fresh data on surging U.S. fuel stocks.
            
    At 9:12 a.m. (1412 GMT), the Canadian dollar          was
trading 0.6 percent higher at 1.3277 to the greenback, or 75.32
U.S. cents. The currency, which on Thursday touched its weakest
intraday level in more than two weeks at 1.3375, traded in a
range of 1.3274 to 1.3360.
    Still, the loonie was on track to dip 0.1 percent for the
week after a string of weak domestic data that has prompted some
economists to project that Canada's economy contracted in
November.                         
    Chances of another Bank of Canada interest rate hike by the
summer have fallen to about 30 percent from more than 50 percent
at the end of last week.           
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 2.5 Canadian cents to yield 1.875 percent and the 10-year
            declined 20 Canadian cents to yield 1.955 percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent widened by 1.1 basis points to a spread of 71 basis
points in favor of the U.S. bond, its widest gap since Dec. 20.

 (Reporting by Fergal Smith
Editing by Paul Simao)
  
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