April 3, 2020 / 8:11 PM / in 2 months

CANADA FX DEBT-Loonie steadies as investors eye potential oil output cut

 (Adds dealer quotes and details throughout, updates prices)
    * Canadian dollar trades near flat against the greenback
    * For the week, loonie falls 1.2%
    * Price of U.S. oil increases 11.9%
    * Canadian bond yields trade mixed across the curve

    By Fergal Smith
    TORONTO, April 3 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday as oil prices
soared for a second straight day, while grim U.S. jobs data
added to evidence of the economic damage from the coronavirus
pandemic.
    At 3:36 p.m. (1936 GMT), the Canadian dollar          was
trading nearly unchanged at 1.4136 to the greenback, or 70.74
U.S. cents. The currency, which was down 1.2% for the week,
traded in a range of 1.4095 to 1.4223.    
    The loonie's steady showing came as the currency moved
closer to completing a triangle formation on technical charts.
    A breakout from the formation could be forthcoming after
major oil producers decide whether or not to cut production,
said Tony Valente, a senior FX dealer at AscendantFX.
    Hopes that a production cut deal will be announced early
next week helped drive the price of oil, one of Canada's major
exports, sharply higher. U.S. crude oil futures        settled
up 11.9%.                 
    U.S. nonfarm payrolls plummeted by 701,000 in March, a much
bigger-than-expected decline than had been expected. Canada
sends about 75% of its exports to the United States.
            
    Speculators have cut their bearish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
showed. As of March 31, net short positions had fallen to 21,929
contracts from 29,245 in the prior week.
    The Canadian dollar is expected to remain at depressed
levels over the coming months, with analysts in a Reuters poll
slashing their forecasts for the currency as the coronavirus
pandemic potentially pushes Canada's economy into a deep
recession.             
    Ottawa is rolling out more than C$200 billion in support for
the economy, including direct aid to Canadians, wage subsidies
for businesses, loan programs and tax deferrals, while the Bank
of Canada has slashed interest rates to nearly zero and launched
a large-scale asset purchase program, quantitative easing, for
the first time.                         
    Canada's biggest banks have received nearly half a million
requests from homeowners to hold off mortgage payments as the
economic fallout from the outbreak of COVID-19, the respiratory
illness caused by the coronavirus, deepens, according to the
Canadian Bankers' Association.             
    Canadian government bond yields were mixed across the curve,
with the 10-year             rising 1 basis point to 0.710%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Paul Simao)
  
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