September 19, 2017 / 8:52 PM / 3 years ago

CANADA FX DEBT-C$ edges higher despite lower oil prices as greenback dips

 (Adds analyst quotes and details on trading activity; updates
    * Canadian dollar at C$1.2274, or 81.43 U.S. cents
    * Bond prices mixed across steeper yield curve
    * Domestic manufacturing sales fall 2.6 percent in July

    By Fergal Smith
    TORONTO, Sept 19 (Reuters) - The Canadian dollar edged
higher on Tuesday against its U.S. counterpart, shrugging off
soft domestic manufacturing data and lower oil prices as the
greenback broadly fell ahead of a Federal Reserve interest rate
decision on Wednesday.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.2274 to the greenback, or 81.47 U.S. cents, up
0.2 percent. The currency traded in a range of C$1.2255 to
    The loonie was paring some losses from the day before, when
a Bank of Canada policymaker said the currency's strength will
be a factor in future rate decisions.             
    It touched on Monday its weakest in nearly two weeks at
    "We are really just treading water ahead of tomorrow's
announcement by the Fed," said Michael Goshko, corporate risk
manager at Western Union Business Solutions.
    The U.S. dollar        weakened against a basket of
currencies in advance of the Fed decision. Policymakers are
expected to decide on the reduction of the central bank's $4.2
trillion worth of bond holdings.            
    Canadian manufacturing sales dropped by 2.6 percent in July,
the most in more than a year, as annual auto plant shutdowns cut
sales of cars and motor vehicle parts.             
    Prices of oil, one of Canada's major exports, retreated from
near-five-month highs in advance of data expected to show a
build in U.S. crude inventories as imports resume and refineries
were still restarting after recent storm activity.              
    Canada posted a budget deficit of C$17.8 billion ($14.5
billion) for the 2016-17 fiscal year, the Finance Department
said, below the preliminary deficit of C$21.85 billion reported
in May.             
    Canadian government bond prices were mixed across a steeper
yield curve, with the two-year            up 2 Canadian cents to
yield 1.557 percent and the 10-year             down 10 Canadian
cents to yield 2.094 percent.
    Canada's August inflation report and retail sales data for
July are due on Friday.

 (Reporting by Fergal Smith; Editing by Bill Trott and Jonathan
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