January 24, 2018 / 9:33 PM / 7 months ago

CANADA FX DEBT-C$ posts near 4-month high as greenback slides, oil climbs

 (Adds strategist quotes and details on NAFTA negotiations,
updates prices)
    * Canadian dollar at C$1.2331, or 81.10 U.S. cents
    * Currency touches a nearly four-month high at C$1.2318
    * Bond prices lower across the yield curve
    * 10-year yield reaches highest in more than three years

    By Fergal Smith
    TORONTO, Jan 24 (Reuters) - The Canadian dollar strengthened
to a nearly four-month high against its U.S. counterpart on
Wednesday as the greenback fell broadly and oil prices rose,
while investors also weighed talks taking place in Montreal to
renegotiate NAFTA.
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading 0.7 percent higher at C$1.2331 to the greenback, or
81.10 U.S. cents.
    The currency's weakest level of the session was C$1.2428,
while it touched its strongest since Sept. 25 at C$1.2318.    
    "It is largely reflecting a weaker U.S. dollar move," said
Mark Chandler, head of Canadian fixed income and currency
strategy at RBC Capital Markets. 
    The U.S. dollar        slid to a three-year low against a
basket of major peers after the U.S. Treasury secretary said he
welcomed weakness in the currency.             
    "There's no need for a weaker U.S. dollar on the part of the
U.S. economy," Chandler said. "In some sense, his comments were
misinterpreted."
    The price of oil, one of Canada's major exports, was boosted
by a record 10th straight weekly decline in U.S. crude
inventories. U.S. crude oil futures        settled 1.8 percent
higher at $65.61 a barrel.             
    Canada's chief negotiator in talks to update the North
American Free Trade Agreement, Steve Verheul, told Reuters he
had "a constructive conversation" with his U.S. counterpart
after presenting Canada's suggested amendments to the sunset
clause.             
    The United States has demanded a sunset clause that would
kill NAFTA if it is not renegotiated after five years. 
    Investors are awaiting domestic data later in the week that
could help guide expectations for further Bank of Canada
interest rate hikes.
    Last week, the central bank raised its benchmark interest
rate by 25 basis points to 1.25 percent, its highest since
January 2009, after recent data showed stronger inflation and
strong job growth.
    Canadian retail sales data for November is due on Thursday
and the December inflation report is due on Friday.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 2.5 Canadian cents to yield 1.819 percent and the 10-year
            declined 27 Canadian cents to yield 2.263 percent.
    The 10-year yield touched its highest intraday level since
September 2014 at 2.271 percent.

 (Reporting by Fergal Smith; Editing by Phil Berlowitz and Peter
Cooney)
  
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