January 7, 2020 / 9:29 PM / 3 months ago

CANADA FX DEBT-Canadian dollar weakens to one-week low as oil pulls back

 (New throughout, updates prices, market activity and strategist
comments)
    * Canadian dollar declines 0.3% against the greenback
    * Price of U.S. oil falls 0.9%
    * Loonie touches its weakest since last Tuesday at 1.3029
    * Canada posts a trade deficit of C$1.09 billion in November

    By Fergal Smith
    TORONTO, Jan 7 (Reuters) - The Canadian dollar weakened to a
one-week low against its U.S. counterpart on Tuesday, as oil
prices fell and investors turned attention to domestic jobs data
later in the week that could guide expectations for the Bank of
Canada interest rate outlook.
    At 4:06 p.m. (2106 GMT), the Canadian dollar        was
trading 0.3% lower at 1.3005 to the greenback, or 76.89 U.S.
cents. The currency hit its weakest intraday level since New
Year's Eve at 1.3029.
    The price of oil, one of Canada's major exports, surrendered
some recent gains as investors reconsidered the likelihood of
immediate supply disruptions in the Middle East after the United
States killed a top Iranian military commander last week. U.S.
crude oil futures        settled 0.9% lower at $62.70 a barrel.
            
    The pullback in oil prices weighed on the loonie after the
currency had "a pretty overextended move" in recent days, said
Erik Nelson, a currency strategist at Wells Fargo.
    Last Tuesday, the Canadian dollar notched a 14-month high at
1.2947.
    The decline for the loonie on Tuesday came as official data
showed that Canada's exports and imports both declined in
November and as separate data showed that purchasing managers
were less active in December.                         .
    Bank of Canada Governor Stephen Poloz is due to speak on
Thursday, while Canada's jobs data for December is due on
Friday. In November, the Canadian job market shed more than
71,000 positions.
    "It seems for now the BoC is on hold," Nelson said. "With
just one month of weak employment it is hard to say they are
going to change (interest rates) but if we get another bad
number on Friday it could be a different story."
    The central bank left its benchmark interest rate on hold at
1.75% in 2019 even as some other major central banks, such as
the Federal Reserve and the European Central Bank, eased.
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.641% and the
10-year             rising 4 Canadian cents to yield 1.583%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis, Nick
Zieminski and David Gregorio)
  
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