March 4, 2019 / 9:07 PM / 8 months ago

CANADA FX DEBT-C$ hits near 3-week low ahead of BoC rate decision this week

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar weakens 0.1 percent against the greenback
    * Loonie touches its weakest since Feb. 14 at 1.3338
    * Price of U.S. oil rises 1.4 percent
    * Canadian bond prices rise across a flatter curve

    By Fergal Smith
    TORONTO, March 4 (Reuters) - The Canadian dollar weakened to
its lowest point in nearly three weeks against its U.S.
counterpart on Monday, as the greenback climbed broadly and
investors bet the Bank of Canada would leave interest rates
unchanged later this week.
    At 3:32 p.m. (2032 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3308 to the greenback, or 75.14
U.S. cents. The currency touched its weakest level since Feb. 14
at 1.3338.
    Canadian data on Friday showing that economic growth slowed
more than expected in the fourth quarter has underpinned market
expectations the Bank of Canada will not hike interest rates on
Wednesday.             
    "The data is coming out worse and worse and I think that
will continue," said Christian Lawrence, senior market
strategist at Rabobank. "I don't think the Bank of Canada is
raising rates again."
    The Bank of Canada, which has tightened by 125 basis points
since July 2017, is widely expected to leave its benchmark rate
on hold at 1.75 percent on Wednesday. The central bank may be
closer to a policy turning point, according to economists polled
by Reuters.                            
    The U.S. dollar        rose against a basket of major
currencies, as U.S. stocks fell despite rising hopes that China
and the United States are moving closer to a trade deal that
would end sparring between the world's two biggest economies.
            
    Canada exports many commodities, including oil, so its
economy could benefit from an improved outlook for global trade.
    U.S. crude oil futures        settled 1.4 percent higher at
$56.59 a barrel.          
    Speculators have cut their bearish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
and Reuters calculations showed on Friday. As of Feb. 19, net
short positions had fallen to 36,437 contracts from 37,537 in
the prior week.    
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 3.5 Canadian cents to yield 1.747 percent and
the 10-year             was up 32 Canadian cents to yield 1.90
percent.
    Canada's trade data for December is due on Wednesday and the
February employment report is due on Friday.

 (Reporting by Fergal Smith; Editing by Jonathan Oatis and Peter
Cooney)
  
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