January 23, 2018 / 9:36 PM / 2 years ago

CANADA FX DEBT-C$ firms as Trump avoids NAFTA threats, oil rises

 (Adds strategist quotes, details on market activity, updates
    * Canadian dollar at C$1.2426, or 80.48 U.S. cents
    * Sixth round of NAFTA talks under way in Montreal
    * Bond prices mixed across the yield curve

    By Fergal Smith
    TORONTO, Jan 23 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Tuesday after U.S. President
Donald Trump said talks to renegotiate NAFTA were going well and
as oil prices rose.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading 0.1 percent higher at C$1.2426 to the greenback, or
80.48 U.S. cents.
    The currency traded in a range of C$1.2422 to C$1.2490.
    "Oil has returned as a driver, it has helped push USD-CAD
lower in today's session," said Greg Anderson, global head of
foreign exchange strategy in New York. "We also got a nice
little move on the Trump headlines."
    Trump previously threatened to withdraw from the North
American Free Trade Agreement, which could hurt Canada's
economy. The country sends 75 percent of its goods exports to
the United States.
    It has helped the Canadian dollar that Trump was not issuing
more threats, Anderson said. 
    The sixth and penultimate round of talks on renegotiating
NAFTA among Canada, the United States and Mexico opened in
Montreal on Tuesday. Trump, who has blamed NAFTA for the loss of
U.S. jobs, told reporters the talks were going "pretty well."
    Canada has responded to the lack of clarity over the future
of the 1994 agreement by attempting to diversify its trade.
Earlier on Tuesday, it and 10 other nations agreed to sign a
reworked Asia-Pacific trade pact.                     
    The price of oil, one of Canada's major exports, was lifted
by healthy world economic growth prospects and production curbs
by the Organization of the Petroleum Exporting Countries, Russia
and their allies.             
    U.S. crude        prices settled 1.4 percent higher at
$64.47 a barrel.
    The U.S. dollar        extended recent weakness against a
basket of major currencies to hit a three-year low.             
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.803 percent
and the 10-year             rising 5 Canadian cents to yield
2.233 percent.
    On Monday, the 10-year yield touched its highest intraday in
more than three years at 2.249 percent.
    Canadian retail sales data for November is due on Thursday
and the December inflation report is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Peter Cooney)
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