January 20, 2020 / 9:38 PM / a month ago

CANADA FX DEBT-Canadian dollar strengthens as higher oil prices support

 (Adds dealer quotes, details throughout; updates prices)
    * Canadian dollar gains 0.1% against the greenback
    * Canadian home prices rise 0.2% in December
    * Price of U.S oil increases 0.2%
    * Canadian bond prices edge lower across the yield curve

    By Fergal Smith
    TORONTO, Jan 20 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Monday as oil prices rose, but
the loonie stuck to its recent sideways trading pattern ahead of
a Bank of Canada interest rate decision this week.
    At 4:00 p.m. (2100 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3043 to the greenback, or 76.67 U.S.
cents. The currency, which was the top-performing G10 currency
in 2019, has settled into a trading range of about 1.3030 to
1.3080 since Jan. 10.    
    The price of oil, one of Canada's major exports, rose to its
highest in more than a week after two large crude production
bases in Libya began shutting down amid a military blockade.
U.S. crude oil futures        were up 0.2% at $58.66 a barrel.
            
    "Oil is a little bit higher today and that's helped the
Canadian dollar maintain its strength," said Darren Richardson,
chief operating officer at Richardson International Currency
Exchange Inc.
    Still, Richardson does not expect much movement in the
currency until after the Bank of Canada interest rate
announcement on Wednesday, when the central bank will also
update its outlook for the economy.
    While the economy has slowed in recent months a revival may 
be under way, according to a Reuters poll of economists, who
were mostly confident a rate cut was not needed and predicted
monetary policy would remain unchanged this year.             
    The Bank of Canada has left its benchmark interest rate on
hold at 1.75% since October 2018 despite easing by some other
major central banks. It has pointed to housing activity as a
source of resilience in the domestic economy.
    The Teranet-National Bank Composite House Price Index rose
0.2% last month from November, helped by gains for some
metropolitan areas in the central and eastern parts of the
country, data showed on Monday.             
    Canada's inflation report for December is due on Wednesday,
while November retail sales data is due on Friday.
    FX trading volumes were thin on Monday as Lunar New Year
approaches in Asia and U.S markets closed for Martin Luther King
Day.                         
    Canadian government bond prices edged lower across the yield
curve, with the two-year            down 0.5 Canadian cent to
yield 1.65% and the 10-year             falling 4 Canadian cents
to yield 1.566%.

 (Reporting by Fergal Smith; editing by Nick Macfie and Bill
Berkrot)
  
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