January 22, 2018 / 9:34 PM / 5 months ago

CANADA FX DEBT-C$ strengthens ahead of NAFTA talks as wholesale trade rises

 (Adds strategist quote, background, updates prices)
    * Canadian dollar at C$1.2453, or 80.30 U.S. cents
    * Canadian wholesale trade rises 0.7 percent in November
    * Bond prices little changed across the yield curve
    * 10-year yield touches a three-year high at 2.249 percent

    By Fergal Smith
    TORONTO, Jan 22 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday, gravitating toward the
middle of this year's range ahead of the resumption of talks to
renegotiate NAFTA and as investors weighed domestic data showing
an increase in wholesale trade.
    The value of Canadian wholesale trade rose for the second
month in a row in November on broad gains across sectors, data
from Statistics Canada showed. The 0.7 percent increase was shy
of economists' forecasts for a 1 percent gain, while volumes
rose 0.5 percent.             
    The sixth and penultimate round of talks on renegotiating
the North American Free Trade Agreement among Canada, the United
States and Mexico is scheduled to take place in Montreal from
Tuesday to next Monday.
    The future of NAFTA was the most significant downside risk
the economy faced, the Bank of Canada said last week as it
raised its benchmark interest rate, as expected, but tempered
expectations for additional increases over the coming months.
    "Everybody is waiting to see what happens with NAFTA and
with inflation at the end of the week," said Alvise Marino, a
foreign exchange strategist at Credit Suisse in New York.
    Canada's annual inflation rate is expected to have dipped
slightly in December but still remain near the Bank of Canada's
2 percent target. Analysts will watch the three measures of
underlying core inflation to gauge how quickly the central bank
may raise interest rates again.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading at C$1.2453 to the greenback, or 80.30 U.S. cents, up
0.3 percent.
    The currency traded in a range of C$1.2435 to C$1.2520.
Since the start of the year, the range has been C$1.2355 to
C$1.2590.
    Speculators have raised bullish bets on the Canadian dollar
for the second straight week, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday.             
    The U.S. dollar        dipped against a basket of major
currencies, although some losses were pared after news of a deal
to end a U.S. government shutdown.             
    Canadian government bond prices were little changed across
the yield curve, with the 10-year             rising 2 Canadian
cents to yield 2.241 percent. The yield touched its highest
intraday since September 2014 at 2.249 percent.    
    U.S. crude oil futures        settled 0.4 percent higher at
$63.62 a barrel. Oil is one of Canada's major exports.
            

 (Reporting by Fergal Smith; Editing by Frances Kerry and Peter
Cooney)
  
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