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CANADA FX DEBT-Canadian dollar slides as oil prices drop, trade deficit widens

    * Canadian dollar falls 0.5% against the greenback
    * Canada's trade deficit widens to C$2.45 billion in July 
    * Price of U.S. oil decreases 1.8%
    * Canadian bond yields edge lower across the curve

    TORONTO, Sept 3 (Reuters) - The Canadian dollar lost ground
against its broadly stronger U.S. counterpart on Thursday as oil
prices fell and data showed a widening in Canada's trade
deficit, with the loonie extending its pullback from an
eight-month high on Tuesday.
    Canada posted a trade deficit of C$2.45 billion in July as
imports climbed at a faster pace than exports, data from
Statistics Canada showed. June's deficit was revised lower to
C$1.59 billion.             
    The price of oil, one of Canada's major exports, dropped as
worries about weaker U.S. gasoline demand and a sluggish
economic recovery from the COVID-19 pandemic dented sentiment.
U.S. crude        prices were down 1.8% at $40.77 a barrel.
    The U.S. dollar        extended its rebound from a two-year
low before paring some gains, as European Central Bank
policymakers reportedly expressed concern about the economic
impact of the euro's recent rise.             
    The Canadian dollar        was trading 0.5% lower at 1.3107
to the greenback, or 76.30 U.S. cents, which was its biggest
decline in nearly one month. The currency, which notched on
Tuesday its strongest intraday level since Jan. 8 at 1.2990,
traded in a range of 1.3040 to 1.3117.
    Canada's employment report for August is due on Friday,
which could offer clues on the strength of economic recovery,
while the Bank of Canada is due to make a policy announcement
next week.
    Since March, the central bank has slashed interest rates to
nearly zero and begun buying government bonds in large scale.
    Canadian government bond yields edged lower across the curve
on Thursday, with the 10-year             down 0.4 basis points
at 0.547%. It touched its lowest intraday since Aug. 24 at
0.539%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci)
  
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