September 11, 2017 / 2:24 PM / 3 years ago

CANADA FX DEBT-C$ edges higher as Canada's bond yields climb

    * Canadian dollar at C$1.2143, or 82.35 U.S. cents
    * Bond prices lower across the yield curve
    * 2-year yield touches 6-year high at 1.643 percent

    TORONTO, Sept 11 (Reuters) - The Canadian dollar edged
higher on Monday against its U.S. counterpart, supported by
further gains in Canada's bond yields after the country's
central bank surprised some investors last week by raising
interest rates.
    Wednesday's rate hike, which was the second in three months,
helped drive the loonie nearly 2 percent higher last week.
    Investors had expected that the Bank of Canada would wait
until October to hike again after it increased rates in July for
the first time in nearly seven years.
    The 2-year yield, which has jumped as much as 99 basis
points since mid-May, on Monday hit its highest since June 2011
at 1.643 percent.
    At 10:02 a.m. ET (1402 GMT), the Canadian dollar         
was trading at C$1.2143 to the greenback, or 82.35 U.S. cents,
up 0.1 percent.
    The currency traded in a range of C$1.2098 to C$1.2170. On
Friday, the loonie touched its strongest since May 2015 at
    Gains for the loonie came even as prices of oil, one of
Canada's major exports, fell.
    U.S. crude oil prices       , which declined more than 3
percent on Friday, were down 0.88 percent at $47.06 a barrel on
concerns that Hurricane Irma's pounding of heavily populated
areas of Florida could dent demand in the top oil-consuming
    Speculators have increased bullish bets on the loonie, data
from the U.S. Commodity Futures Trading Commission and Reuters
calculations showed on Friday. Canadian dollar net long
positions edged up to 53,644 contracts as of Sept. 5 from 53,167
a week earlier.                 
    The U.S. dollar        gained ground as a revival in
interest in riskier assets prompted some investors to cut short
bets against the greenback before U.S. inflation data this week.
    U.S. stocks rose on relief that Hurricane Irma weakened and
North Korea did not conduct a nuclear test over the weekend as
    Canadian government bond prices were lower across the yield
curve as demand faded for safe-haven government bonds.
    The 10-year             declined 31 Canadian cents to yield
2.02 percent. The yield reached its highest intraday since July
31 at 2.042 percent.
    Canadian housing starts rose unexpectedly in August, data
from the Canada Mortgage and Housing Corporation showed.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
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