August 30, 2017 / 9:13 PM / 3 years ago

CANADA FX DEBT-C$ falls most in a month as greenback climbs, oil drops

 (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar at C$1.2622, or 79.22 U.S. cents
    * Loonie touches its weakest since Aug. 18 at C$1.2637
    * Bond prices little changed across the yield curve

    By Fergal Smith
    TORONTO, Aug 30 (Reuters) - The Canadian dollar suffered its
biggest drop in a month against a broadly firmer greenback on
Wednesday, as oil prices fell and investors cut bullish bets on
the loonie ahead of a Bank of Canada interest rate decision next
    At 5 p.m. EDT (2100 GMT), the Canadian dollar          was
trading at C$1.2622 to the greenback, or 79.22 U.S. cents, down
0.9 percent, its deepest loss since July 27.
    "I kind of expected a clean-out trade at some point before
next Wednesday (when the Bank of Canada announces its rate
decision), said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets. "We got it a bit early."
    Speculators have been long the Canadian dollar for six
straight weeks, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations show.             
    Canada's central bank raised rates in July for the first
time in nearly seven years. It is expected to wait until October
before hiking again, data from the overnight index swaps market
    The country's gross domestic product data for the second
quarter is due on Thursday. The economy likely saw strong
second-quarter growth, which could strengthen the case for
another hike in the coming months.
    The loonie's strongest level of the session was C$1.2501,
while it touched its weakest since Aug. 18 at C$1.2637.
    Losses for the loonie came as Mexico sees a serious risk the
United States will withdraw from the North American Free Trade
    Canada sends 75 percent of its exports to the United States
and could suffer badly if NAFTA is abandoned.   
    The U.S. dollar        rallied against a basket of major
currencies after strong U.S. economic data boosted expectations
for a solid U.S. jobs report on Friday.              
    Prices of oil, one of Canada's major exports, slid as
flooding and damage from Tropical Storm Harvey shut nearly a
quarter of U.S. refinery capacity, curbing demand for crude.
    U.S. crude        prices settled 1 percent lower at $45.96 a
    Canada's current account deficit widened to C$16.32 billion
in the second quarter from a revised C$12.92 billion deficit in
the first quarter as imports of goods saw the largest quarterly
growth in nine years.             
    Canadian government bond prices were little changed across
the yield curve, with the 10-year             flat to yield
1.836 percent.

 (Reporting by Fergal Smith; Editing by Chizu Nomiyama and Tom
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