June 12, 2020 / 8:15 PM / a month ago

CANADA FX DEBT-Canadian dollar loses weekly winning streak as market mood sours

    * Canadian dollar rises 0.2% against the greenback
    * Loonie falls 1.3% for the week
    * Canadian industrial capacity use falls in the first
quarter
    * Canadian bond yields were mixed across the curve

    By Fergal Smith
    TORONTO, June 12 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday along with a
rebound in Wall Street stocks, but a sharp decline a day earlier
left the loonie with a weekly loss, ending a three-week winning
streak.
    The Canadian dollar        was trading 0.2% higher on the
day at 1.3595 to the greenback, or 73.56 U.S. cents. The
currency traded in a range of 1.3527 to 1.3666.
    The loonie was down 1.3% for the week, after climbing for
each of the previous three weeks. On Wednesday, it reached its
strongest level in more than three months at 1.3311.
    "The souring mood in markets has lifted the USD from its
COVID-depths and may keep the dollar's key peers on the
defensive in the short-run, particularly high-beta FX such as
the CAD, AUD, and MXN," strategists at Scotiabank, including
Shaun Osborne, said in a note.
    Beta is a measure of a financial asset's volatility compared
to the market. Canada is a major exporter of commodities,
including oil, so the loonie tends to be sensitive to the
outlook for the global economy.
    U.S. stocks rallied a day after their biggest daily dive in
about three months, while U.S. crude oil futures settled 0.2%
lower at $36.26 a barrel.                             
    Canadian industries ran at 79.8% of capacity in the first
quarter of 2020, down from an upwardly revised 81.4% in the
fourth quarter, Statistics Canada said.             
    Separate data from Canada's national statistics agency
showed that producer prices, in a flash estimate, gained 1.2% in
May from April, led by strong gains in meat prices as COVID-19
closed down packing plants.             
    Canadian government bond yields were mixed across the curve,
with the 10-year             up less than a basis point at
0.529%. Still, the 10-year yield has tumbled nearly 24 basis
from last Friday's peak.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and David
Gregorio)
  
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