March 11, 2019 / 7:26 PM / 7 days ago

CANADA FX DEBT-C$ firms with oil but worries linger on domestic outlook

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar rises 0.1 percent against the greenback
    * Price of U.S. oil climbs 1.3 percent
    * Canada-U.S. 10-year spread touches its widest in three
years

    By Fergal Smith
    TORONTO, March 11 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Monday as oil prices
rose, but gains for the loonie were checked by worries about the
outlook for Canada's economy despite data on Friday showing a
bumper jobs gain in February.    
    Friday's employment data revealed the third month of
outsized job gains in the last four. Still, Canada's economy
barely grew in the fourth quarter and last week the Bank of
Canada turned more dovish on the outlook for interest rates.
                            
    "The market is still looking at the (economic) data and is
fearful of signs of further weakness." said Mark Chandler, head
of Canadian fixed income and currency strategy at RBC Capital
Markets. "(Oil) at the very least, it's one of the few things
that hasn't added to the pessimism"
    The price of oil, one of Canada's exports, was lifted on
Monday by comments by Saudi Energy Minister Khalid al-Falih that
an end to OPEC-led supply cuts was unlikely before June. U.S.
crude oil futures        settled 1.3 percent higher at $56.79 a
barrel.             
    At 2:49 p.m. (1849 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3404 to the greenback, or 74.60
U.S. cents. The currency, which on Thursday touched its weakest
intraday level in more than two months at 1.3467, traded in a
range of 1.3395 to 1.3440.
    The modest gain for the loonie came as U.S. data showed
retail sales unexpectedly rose in January but receipts in
December were much weaker than initially thought.             
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 0.5 Canadian cent
to yield 1.656 percent and the 10-year             rising 6
Canadian cents to yield 1.758 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 2.5 basis points to a spread of 88.5 basis
points in favor of the U.S. bond, its widest since December
2015.

 (Reporting by Fergal SmithD; editing by Jonathan Oatis)
  
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