December 10, 2019 / 9:21 PM / 7 months ago

CANADA FX DEBT-C$ keeps to tight range as investors await Poloz for rate guidance

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Canada, Mexico and U.S. sign overhaul of trade pact
    * Price of U.S. oil increases by 0.4%
    * Canadian bond prices decline across a steeper yield curve

    By Fergal Smith
    TORONTO, Dec 10 (Reuters) - The Canadian dollar edged higher
against the greenback on Tuesday, sticking to a narrow trading
range as investors awaited guidance on the Bank of Canada
interest rate outlook and weighed prospects of the United States
delaying additional tariffs on China.
    Bank of Canada Governor Stephen Poloz, who will step down
when his seven-year mandate expires in June             , is due
to speak on Thursday on "seeing the big picture."
    Poloz's speech "will underscore the fact that they are on
hold, certainly for now," said Shaun Osborne, chief currency
strategist at Scotiabank. "The hurdle for a rate cut here is
quite high."    
    Last week, the central bank left its benchmark interest rate
unchanged at 1.75% as it pointed to early signs the global
economy was stabilizing and sources of resilience in the
Canadian economy.             
    Chances of a cut at the bank's next rate decision in January
have declined to less than 15% from about 25% earlier this
month.               
    Wall Street's main stock indexes were little changed,
hovering near record highs, as investors awaited concrete news
on whether U.S. tariffs on Chinese imports would take effect on
Sunday, a potential turning point in the two countries' trade
dispute that has convulsed markets.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from reduced trade uncertainty. U.S.
crude oil futures        settled 0.4% higher at $59.24 a barrel.
            
    At 3:29 p.m. (2029 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3226 to the greenback, or 75.61 U.S.
cents.
    The currency traded between 1.3225 to 1.3249, holding in a
narrow range despite news that top officials from Canada, Mexico
and the United States signed a fresh overhaul of their
quarter-century-old regional trade pact.             
    Most investors and the Bank of Canada have probably already
taken the U.S.-Mexico Canada Agreement (USMCA) into account,
Osborne said.
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 0.5 Canadian cent
to yield 1.669% and the 10-year             falling 15 Canadian
cents to yield 1.601%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and Peter
Cooney)
  
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