January 24, 2020 / 8:10 PM / 2 months ago

CANADA FX DEBT-Canadian dollar slips as oil prices fall on China virus scare

    * Oil drops more than 2% on China virus fears
    * Canadian govt bond prices rise across the maturity curve

 (Adds comment, updates prices)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 24 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday, lingering close to the
one-month low hit in the previous session, as the coronavirus
outbreak weighed on oil prices and amid broad-based strength for
the U.S. currency.
    The price of oil, one of Canada's major exports, fell more
than 2% on Friday and headed for a steep weekly decline over
concerns that the coronavirus will spread farther in China, the
world's second-largest oil consumer, curbing travel and oil
demand.                              
    At 3 p.m. EST (2000 GMT), the Canadian dollar          was
trading down about 0.12% at 1.3141 to the greenback, or 76.10
U.S. cents.
    On Wednesday, the loonie came under pressure after the Bank
of Canada (BoC) left its benchmark interest rate on hold at
1.75% as expected but said a future cut was possible should a
recent slowdown in domestic growth persist.             
    "We've seen before how BoC meetings can result in lengthy
trends for USD/CAD, lasting at least until the next BoC meeting.
I think we may well have one of those scenarios now as well, so
I wouldn’t necessarily fade the move at this point," Marshall
Gittler, chief strategist at ACLS Global, said in a note.
    The loonie has fallen about 1% since the start of the year
after climbing 5% in 2019, when it was the top-performing G10
currency.
    Canadian retail sales were up 0.9% in November from October
at C$51.48 billion ($39.19 billion), on stronger sales at motor
vehicle and parts dealers, as well as food and beverage stores,
Statistics Canada said on Friday.             
    "(The) rise in retail sales will come as a relief to the
Bank of Canada and supports our view that it will leave interest
rates unchanged this year," said Stephen Brown, senior Canada
economist at Capital Economics.
    Canadian government bond prices were higher across the
maturity curve, with the two-year            price up 6.5
Canadian cents to yield 1.486% and the benchmark 10-year
            rising 43.2 Canadian cents to yield 1.367%.

 (Reporting by Saqib Iqbal Ahmed; Editing by David Gregorio and
Jonathan Oatis)
  
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