February 11, 2019 / 9:48 PM / a month ago

CANADA FX DEBT-C$ dips as oil falls, investors demand greenbacks

 (Adds dealer quotes, details on activity; updates prices)
    * Canadian dollar declines 0.1 percent vs U.S. dollar
    * Price of U.S. oil falls 0.6 percent
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, Feb 11 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday as oil prices fell and
investors sought to own greenbacks, betting that the U.S.
currency would fare best as the global economy slows.
    The U.S. dollar        jumped as concerns grew that the
latest round of U.S.-China talks may not yield a deal between
the world's largest economies before the March deadline.
    "People want to be long U.S. dollars here," said Scott
Lampard, head of global markets at HSBC Bank Canada. "The sense
is that the rest of the world is slowing at a pace that is more
rapid than the U.S."
    Canada is a major producer of commodities, including oil, so
its economy could be hurt by a slowdown in the global economy.
    Oil prices fell as worries surrounding the resumption of
U.S.-China trade talks overshadowed support from OPEC-led supply
restraint. U.S. crude oil futures        settled 0.6 percent
lower at $52.41 a barrel.             
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3300 to the greenback, or 75.19
U.S. cents. The currency, which touched on Friday its weakest
intraday level in two weeks at 1.3329, traded in a range of
1.3261 to 1.3319.
    Still, the New Zealand dollar        was the only G10
currency other than the greenback to outperform the loonie. It
follows Canadian data last Friday showing bumper jobs numbers in
January that far exceeded market expectations and highlighted
the strength of the economy.             
    "You have got the bond market looking at the strength of the
labor market in Canada and saying we feel like higher rates are
warranted," Lampard said.
    The Bank of Canada has raised interest rates by a total of
125 basis points since July 2017. Chances of another hike before
the end of the year have climbed since the jobs data to more
than 30 percent from 13 percent, the overnight index swaps
market indicated.           
    Canadian government bond prices on Monday were lower across
the yield curve in sympathy with U.S. Treasuries, as investors
awaited U.S. data this week that will show inflation pressures
in January.             
    The two-year            fell 4 Canadian cents to yield 1.792
percent and the 10-year             declined 25 Canadian cents
to yield 1.910 percent.

 (Reporting by Fergal Smith; Editing by Lisa Shumaker)
  
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