January 17, 2020 / 9:23 PM / in 3 months

CANADA FX DEBT-C$ weakens amid risk currency moves will concern Bank of Canada

 (Adds strategist quote and details throughout; updates prices)
    * Canadian dollar falls 0.2% against the greenback
    * Loonie ends 0.1% lower for the week
    * Foreign investors sell Canadian securities in November 
    * Canadian bond prices trade mixed across a steeper yield
curve

    By Fergal Smith
    TORONTO, Jan 17 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, as the greenback broadly
rose and investors saw risk that the Bank of Canada would remark
on the loonie's recent appreciation at an interest rate decision
next week.
    The central bank is expected to leave its benchmark interest
rate on hold at 1.75% next Wednesday, when it will also update
its economic outlook.
    "We do expect that the loonie may make an appearance in the
statement with respect to how the CAD has appreciated versus
other currencies," said Bipan Rai, North America head, FX
strategy at CIBC Capital Markets.
    A stronger Canadian dollar could reduce the competitiveness
of Canada's exports, hurting the country's trade-dependent
economy. The loonie climbed 5% against the U.S. dollar        in
2019, helped by a strong finish to the year, while it notched
even bigger gains against some other major currencies, such as
the euro       .
    At 3:24 p.m. (2024 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3062 to the greenback, or 76.56 U.S.
cents. The currency traded in a range of 1.3034 to 1.3076, while
it was down 0.1% for the week.
    The U.S. dollar        gained ground against a basket of
major currencies, buoyed by encouraging U.S. economic data,
while U.S. crude oil futures        settled 2 cents higher at
$58.54 a barrel.             
    Oil is one of Canada's major exports.    
    A revival in the Canadian economy may already be under way,
according to a Reuters poll of economists, who were mostly
confident a rate cut was not needed and so predicted monetary
policy would remain unchanged this year.             
    Speculators raised bullish bets on the Canadian dollar for
the third straight week, data from the U.S. Commodity Futures
Trading Commission and Reuters calculations showed. As of Jan.
14, net long positions had increased to 32,852 contracts from
26,367 in the prior week.
    Foreign investors sold a net C$1.75 billion in Canadian
securities in November, led by private corporate instruments,
following a revised C$11.32 billion total purchase in October,
Statistics Canada said.             
    Canadian government bond prices were mixed across a steeper
yield curve, with the 10-year             falling 14 Canadian
cents to yield 1.570%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Diane Craft)
  
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