March 25, 2019 / 7:48 PM / 6 months ago

CANADA FX DEBT-C$ holds near 2-week low as growth prospects worry investors

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1 percent vs greenback
    * Loonie touches weakest since March 8 at 1.3445
    * Price of U.S. oil falls 0.4 percent
    * Canada's yield curve inverts further

    By Fergal Smith
    TORONTO, March 25 (Reuters) - The Canadian dollar edged
higher on Monday but held near an earlier two-week low as
Canada's yield curve inverted further, with investors worrying
about slower growth prospects for the domestic and global
economies.
    U.S. stocks extended the previous session's steep sell-off
as fears for economic growth persisted despite
better-than-expected data from Germany.             
    The price of oil, one of Canada's major exports, also lost
ground. U.S. crude oil futures        settled 0.4 percent lower
at $58.82 a barrel.
    "Short of oil having a huge rally I don't really see much to
like for the Canadian dollar at the moment," said Christian
Lawrence, senior market strategist at Rabobank. "I am not really
surprised given how things are getting domestically in terms of
data."
    On Friday, domestic data showed weak inflation and a
surprise drop in retail sales, while Canada's yield curve
inverted for the first time since 2007.             
    Inversion is seen by some investors as a leading indicator
of recession.
    At 3:14 p.m. (1914 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3413 to the greenback, or 74.55
U.S. cents. The currency touched its weakest intraday level
since March 8 at 1.3445.
    The two-week low for the loonie came as a top Canadian
official said that many Canadians question why Ottawa should
ratify a new North American free trade deal given Washington's
refusal to lift U.S. tariffs on exports of steel and aluminum.
            
    Canada's trade report for January is due on Wednesday, while
January gross domestic product data is due on Friday.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 8.5 Canadian cents to yield 1.488 percent and the 10-year
            climbed 34 Canadian cents to yield 1.558 percent.
    The 10-year yield, which touched its lowest intraday level
since June 2017 at 1.532 percent, traded 4.4 points further
below the yield on the 3-month T-bill to a spread of -9.7 basis
points.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Sandra Maler)
  
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