May 18, 2017 / 8:48 PM / 3 years ago

CANADA FX DEBT-C$ clings to this week's gains as oil rises

    * Canadian dollar at C$1.3606, or 73.50 U.S. cents
    * Bond prices mixed across a flatter yield curve
    * 10-year yield hits lowest since Nov. 10 at 1.417 percent

    By Fergal Smith
    TORONTO, May 18 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday, holding this
week's gains as higher oil prices offset broader gains for the
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.3606 to the greenback, or 73.50 U.S. cents,
nearly unchanged, according to Reuters data.    
    It was a calmer day for the market after big moves earlier
in the week, said Andrew Kelvin, senior rates strategist at TD
    The loonie on Wednesday had touched its strongest in nearly
three weeks at C$1.3573, as worries that political uncertainty
in Washington would undermine the Trump administration's ability
to deliver a promised boost to U.S. growth weighed on the
    But the U.S. dollar        rose on Thursday against a basket
of major currencies after stronger-than-expected U.S. economic
data put the focus back on a widely anticipated increase in
overnight interest rates by the Federal Reserve.                
    Prices of oil, one of Canada's major exports, rose ahead of
next week's Organization of the Petroleum Exporting Countries
meeting as key producing countries suggested they would adhere
to production cuts to reduce a global crude glut.             
    U.S. crude oil futures        settled 28 cents higher at
$49.35 a barrel.    
    The Trump administration set the clock ticking toward a
mid-August start of renegotiation of the North American Free
Trade Agreement with Canada and Mexico to try to win better
terms for U.S. workers and manufacturers.             
    Canadian government bond prices were mixed as the curve
flattened in sympathy with the U.S. yield curve.
    "It is exactly the sort of move that you would expect if you
were less likely to get (U.S.) tax reform and you still think
the Federal Reserve is going to tighten." Kelvin said.
    The 10-year             note edged up 4 Canadian cents to
yield 1.447 percent. The yield had hit its lowest intraday since
Nov. 10 at 1.417 percent.
    The gap between the 2-year and 10-year yields narrowed 1.7
basis points to a spread of 77.5 basis points as longer-dated
bonds outperformed.    
    Foreign investment in Canadian securities continued in
March, driven by purchases of corporate bonds and equities,
bringing acquisitions in the first quarter to a record.
    Canadian inflation data for April and retail sales data for
March are due on Friday.

 (Reporting by Fergal Smith; Editing by Dan Grebler)
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