April 9, 2019 / 8:04 PM / a year ago

CANADA FX DEBT-C$ pulls back from 3-week high as tariff tensions weigh

 (Recasts throughout)
    * Canadian dollar dips 0.1% against the greenback
    * Loonie touches its strongest intraday since March 21 at
    * Currency is up 0.2% since the start of the month
    * Canadian bond prices rise across much of the yield curve

    By Fergal Smith
    TORONTO, April 9 (Reuters) - The Canadian dollar edged lower
against the greenback on Tuesday, pulling back from an earlier
near three-week high, as increased tariff tensions added to the
list of uncertainties discouraging investors from taking bets on
the currency.
    Wall Street and the price of oil, one of Canada's major
exports, fell as U.S. President Donald Trump said he would
impose tariffs on $11 billion of European goods and after the
International Monetary Fund cut its global economic growth
    U.S. crude oil futures        settled 0.7% lower at $63.98 a
    "There are just so many factors that are keeping investors
on the sidelines," said Blake Jespersen, managing director,
foreign exchange sales at BMO Capital Markets.
    The U.S.-China trade dispute, the potential for a messy
Brexit and inversion of the U.S. and Canadian yield curves have
all worried investors in recent weeks.                 
    "Given the dovish stance by all the central banks recently I
think investors are looking for signs that maybe the economy
will do slightly better and maybe central banks will be forced
to change their stance," Jespersen said.
    The Bank of Canada has been one of the central banks to turn
more dovish. It has raised interest rates 125 basis points since
July 2017, but data from the overnight index swaps market shows
investors have shifted this year from expecting further
tightening to seeing about a 40% chance of a cut by December.
    At 3:32 p.m. (1932 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3325 to the greenback, or 75.05 U.S.
cents. The currency touched its strongest intraday level since
March 21 at 1.3285.
    Despite the decline, the loonie was up 0.2% since the start
of the month. It has advanced in 11 of the last 13 Aprils, a
winning streak strategists link to seasonal vitality in stocks
and energy products.             
    Canadian government bond prices were higher across much of
the yield curve in sympathy with U.S. Treasuries. The two-year
           rose up 2.5 Canadian cents to yield 1.602% and the
10-year             was up 7 Canadian cents to yield 1.727%.

 (Reporting by Fergal Smith
Editing by Tom Brown)
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