April 8, 2019 / 7:47 PM / 5 months ago

CANADA FX DEBT-C$ beats most G10 rivals as oil rallies, housing starts rebound

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar gains 0.6% against the greenback
    * Canadian housing starts climb 15.8% in March
    * Price of U.S. oil rises 2.1%
    * Canadian bond prices fall across steeper yield curve

    By Fergal Smith
    TORONTO, April 8 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday, performing
better than most other G10 currencies as oil prices climbed to
their highest this year and domestic data showed a 15.8% jump in
March housing starts.
    The price of oil, one of Canada's major exports, rose to a
five-month high on expectations of tightening global supplies.
U.S. crude oil futures        settled 2.1 percent higher at
$64.40 a barrel.             
    "For today it is very much an oil story," said Eric Theoret,
a currency strategist at Scotiabank. "When you have got oil
prices hitting fresh 2019 highs it is important from a terms of
trade perspective."
    Rising export prices can help boost a country's terms of
trade, making its economy wealthier.
    Canadian housing starts climbed in March to a seasonally
adjusted annualized rate of 192,527 units after slowing to a
revised 166,290 units in February.             
    At 3:14 p.m. (1914 GMT), the Canadian dollar          was
trading 0.6% higher at 1.3312 to the greenback, or 75.12 U.S.
cents. Among G10 currencies, only the Norwegian krone       ,
which is also linked to the price of oil, performed better.
    The loonie, which touched on Friday a one-week low at
1.3403, traded in a range of 1.3305 to 1.3386.
    Gains for the loonie came as the U.S. dollar        lost
ground against a basket of major currencies. Investors squared
positions before a European Central Bank meeting this week,
boosting the euro.                 
    Data on Friday from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed that speculators have
raised their bearish bets on the Canadian dollar. As of April 2,
net short positions had increased to 44,323 contracts from
39,571 in the prior week.                     
    More than six months after the United States, Mexico and
Canada agreed a new deal to govern more than $1 trillion in
regional trade, the chances of the countries ratifying the pact
this year are receding.             
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 3.5 Canadian
cents to yield 1.611% and the 10-year             falling 25
Canadian cents to yield 1.729%.
    The 10-year yield touched its highest intraday since March
20 at 1.732%.

 (Reporting by Fergal Smith; Editing by David Gregorio and
Marguerita Choy)
  
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