December 16, 2019 / 9:38 PM / 7 months ago

CANADA FX DEBT-C$ pares gains after posting 7-week high on U.S.-China trade deal

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie touches its strongest level since Oct. 30 at 1.3115
    * Canadian home sales rise 0.6% in November
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Dec 16 (Reuters) - The Canadian dollar strengthened
to a near seven-week high against the greenback on Monday after
a U.S.-China trade deal that could boost the global economy, but
the currency gave up much of its gains as investor optimism was
kept in check.
    At 3:47 p.m. (2047 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3160 to the greenback, or 75.99 U.S.
cents. The currency, which rose 0.6% last week, touched its
strongest intraday level since Oct. 30 at 1.3115.        
    "I think, this morning, loonie buyers bought the hype from
over the weekend," said Erik Bregar, head of FX strategy at the
Exchange Bank of Canada. "As the day goes on, you are starting
to see a little bit of doubt re-enter the picture."
    On Sunday, U.S. Trade Representative Robert Lighthizer said
that a "phase one" trade deal between the United States and
China reached on Friday was "totally done" despite the need for
translation and would nearly double U.S. exports to China over
the next two years.             
    While U.S. officials have touted the deal, Chinese officials
have been more cautious, emphasizing that the trade dispute has
not been completely settled.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade. U.S. crude oil futures        settled 0.2% higher at
$60.21 a barrel.
    Canada's budget deficits will be larger than forecast for
the next five years, Finance Minister Bill Morneau said in a
fiscal update on Monday. That could give Ottawa less room to
spend on new initiatives, which is economic stimulus that the
Bank of Canada has been anticipating.             
    The central bank, which has resisted pressure this year to
ease interest rates, has pointed to housing activity as a source
of resilience in the Canadian economy. Data on Monday from the
Canadian Real Estate Association showed that Canadian home sales
rose in November for the ninth straight month, up 0.6% from
    Separate data, from Statistics Canada, showed that foreign
investors bought a net C$11.32 billion in Canadian securities in
October, led by private corporate bonds.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 6.5 Canadian cents to yield 1.694% and the
10-year             was down 47 Canadian cents to yield 1.631%.
    On Friday, the 10-year yield touched its highest intraday
level in nearly seven months at 1.695%.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
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