August 28, 2017 / 2:00 PM / 3 years ago

CANADA FX DEBT-C$ extends gains as Storm Harvey hurts greenback

    * Canadian dollar at C$1.2454 or 80.30 U.S. cents
    * Bond prices lower across the maturity curve

    TORONTO, Aug 28 (Reuters) - The Canadian dollar strengthened
on Monday against a broadly weaker U.S. dollar, which softened
against key rivals as Tropical Storm Harvey flooded the
country's fourth-largest city.
    The Canadian dollar also shrugged off the latest NAFTA
comments by U.S. President Donald Trump, who tweeted that Mexico
and Canada were both being "very difficult" and again raised the
possibility of scrapping the free trade agreement.             
    At 9:32 a.m. ET (1332 GMT), the Canadian dollar          was
trading at C$1.2453 to the greenback, or 80.30 U.S. cents, up
0.2 percent.
    The U.S. dollar, which slumped on Friday after U.S. Federal
Reserve Chair Janet Yellen failed to mention monetary policy at
a meeting of central bankers in Wyoming, extended its losses to
16-month lows against a basket of major currencies. The decline
came amid concerns about how Tropical Storm Harvey might impact
the country's economy.       
    The Canadian dollar, which has strengthened more than 2.5
percent in the last two weeks and was outperforming other major
currencies, traded between C$1.2445 and C$1.2485, and was on
track to test the recent high of C$1.2414, or 80.55 U.S. cents.
    The greenback's weakness this year, along with a string of
robust domestic economic data, has helped propel the Canadian
dollar up 7.5 percent so far this year. 
    Investors' focus is turning next to second-quarter Canadian
growth data, due on Thursday, for further direction.
    Canadian government bond prices were lower across the
maturity curve, with the two-year            price down 1.5
Canadian cents to yield 1.276 percent and the benchmark 10-year
            falling 13 Canadian cents to yield 1.89 percent.
    The Canada-U.S. two-year bond spread was -6.2 basis points,
while the 10-year spread was -28.6 basis points.

 (Reporting by Solarina Ho; Editing by Bernadette Baum)
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