April 16, 2019 / 7:49 PM / 5 months ago

CANADA FX DEBT-C$ climbs off 11-day low as oil prices rise

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Price of U.S. oil increases 1%
    * Canadian factory sales fall 0.2% in February
    * Canadian government bond prices fall across the yield
curve

    By Fergal Smith
    TORONTO, April 16 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Tuesday, rebounding from
an earlier 11-day low as higher oil prices offset
weaker-than-expected domestic manufacturing data.            
    At 3:09 p.m. (1909 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3352 to the greenback, or 74.90 U.S.
cents. The currency touched its weakest intraday since April 5
at 1.3403.
    The price of oil, one of Canada's major exports, rose as
fighting in Libya and falling Venezuelan and Iranian exports
raised concerns over tightening global supply.             
    U.S. crude oil futures        settled 1% higher at $64.05 a
barrel.
    "Higher oil prices are helping the Canadian dollar," said
Eric Viloria, an FX strategist at Crédit Agricole CIB. "They
offered some cushion surrounding the weaker manufacturing
sales."
    Canadian factory sales were down by 0.2% in February from
January on lower sales of motor vehicles, as well as wood
products, Statistics Canada said. Analysts had forecast no
change.             
    On Monday, a Bank of Canada quarterly survey showed that
Canadian business sentiment has turned slightly negative,
weighed by a weak energy sector, a housing slowdown and global
trade tensions.              
    "What we have seen is that there is still some soft Canadian
data ... it would need to show some more meaningful improvement
before the Canadian dollar can break out of its recent range,"
Viloria said.
    The loonie was nearly unchanged for the month of April after
having climbed 2.2% since the start of 2019.
    Canada's inflation report for March and February trade data
are due on Wednesday.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries as investors favored
riskier assets, such as stocks.             
    The two-year            fell 4.5 Canadian cents to yield
1.631% and the 10-year             was down 23 Canadian cents to
yield 1.783%.
    The Canadian province of Ontario, the world's biggest
sub-sovereign debtor, faces an uphill task to balance the books
in the coming years after its government failed to deliver a
"trophy" cost saving in last week's budget, bond investors say.
               

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and
Sandra Maler)
  
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