February 12, 2020 / 10:19 PM / 5 days ago

CANADA FX DEBT-Loonie climbs to 9-day high as coronavirus fears ease

 (Adds details on activity, updates prices)
    * Canadian dollar rises 0.3% against the greenback
    * Loonie notches a nine-day high at 1.3237
    * Price of U.S. oil increases 2.5% 
    * Canada 10-yr yield hits near three-week high at 1.406%

    By Fergal Smith
    TORONTO, Feb 12 (Reuters) - The Canadian dollar strengthened
to a nine-day high against its U.S. counterpart on Wednesday as
reduced concern about the economic impact of the coronavirus
outbreak boosted stocks and the price of oil, one of Canada's
major exports.
    At 4:52 p.m. EST (2152 GMT), the Canadian dollar         
was trading 0.3% higher at 1.3251 to the greenback, or 75.47
U.S. cents. The currency touched its strongest intraday level
since Feb. 3 at 1.3237.
    "The move reflects a pick-up in risk appetite in global
markets as concerns about the impact of the coronavirus outbreak
recede," analysts at Action Economics said in a note. "A
reported dip in new coronavirus cases in China has been tonic
for investors."
    Global stock markets          and oil prices climbed as
China reported its lowest daily number of new coronavirus cases
since late January. The news stoked investor hopes that fuel
demand in the world's second-largest oil consumer may begin to
recover from the epidemic.                         
    U.S. crude oil futures        settled 2.5% higher at $51.17
a barrel.
    On Monday, the loonie hit a four-month low at 1.3330. The
currency has been pressured since the beginning of the year by
lower commodity prices and a more dovish stance from the Bank of
Canada.             
    Bank of Canada Governor Stephen Poloz is due to participate
in a panel discussion on Thursday in Melbourne, Australia, which
could offer clues on the outlook for interest rates.
    An indigenous community opposing construction of a gas
pipeline in Canada launched a legal challenge on Wednesday over
the climate impact of fossil fuel projects on indigenous
territories while Prime Minister Justin Trudeau urged pipeline
protesters blocking rail lines to find a quick solution.
            
    Canadian government bond yields rose across a steeper yield
curve in sympathy with U.S. Treasuries on Wednesday. The 10-year
yield was up 4 basis points at 1.399%, having touched its
highest intraday level since Jan. 24 at 1.406%.
    Ontario, one of the world's largest sub-sovereign debtors,
priced on Wednesday a C$500 million 7-year green bond, the
finance ministry said, with strong demand helping the province
to borrow at a better rate than for its regular bonds.
             

 (Reporting by Fergal Smith in Toronto
Editing by Bernadette Baum and Matthew Lewis)
  
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