February 5, 2018 / 2:33 PM / 10 months ago

CANADA FX DEBT-C$ hits near two-week low as stocks, oil fall

    * Canadian dollar at C$1.2458, or 80.27 U.S. cents
    * Loonie touches weakest level since Jan. 23 at C$1.2462
    * Bond prices mixed across yield curve

    TORONTO, Feb 5 (Reuters) - The Canadian dollar slipped to a
nearly two-week low against its U.S. counterpart on Monday as a
selloff in equity markets continued and oil prices fell.
    At 9:14 a.m. EST (1414 GMT), the Canadian dollar         
was trading 0.2 percent lower at C$1.2458 to the greenback, or
80.27 U.S. cents.
    The currency's strongest level of the session was C$1.2398,
while it touched its weakest level since Jan. 23 at C$1.2462.
    U.S. stocks opened lower as rising bond yields continued to
fuel the selloff in equities.
    Commodity-linked currencies, such as the Canadian dollar,
tend to underperform when stocks fall, due to the signal that it
sends on prospects for global economic growth.
    The price of oil, one of Canada's major exports, fell as
rising U.S. output and a weaker physical market added to the
pressure from a widespread decline across equities and
commodities.             
    The U.S. dollar        rose against a basket of major
currencies after data on Friday showing a pickup in U.S. wage
growth suggested to some investors that the Federal Reserve
might have to raise interest rates more quickly than previously
thought.
    Canada's trade data for December is due on Tuesday and the
January employment report is due on Friday. The country is
coming off its best year for job growth since 2002 and
economists will look to see whether the job market remains
strong enough to support further interest rate hikes.
    The Bank of Canada hiked rates in January but said
uncertainty surrounding the future of the North American Free
Trade Agreement is clouding the economic outlook.
    Canadian Prime Minister Justin Trudeau took a tough line on
NAFTA on Friday, repeating that he could walk away if he was not
happy with talks to modernize a pact the United States contends
needs major changes.             
    Speculators raised bullish bets on the Canadian dollar for
the fourth straight week, data from the U.S. Commodity Futures
Trading Commission and Reuters calculations showed on Friday. As
of Tuesday, net long positions had risen to 33,465 contracts
from 22,557 a week earlier.
    Canadian government bond prices were mixed across the yield
curve, with the two-year            up 0.5 Canadian cent to
yield 1.851 percent and the 10-year             falling 3
Canadian cents to yield 2.366 percent.
    The 10-year yield touched its highest intraday level since
May 2014 at 2.393 percent.

 (Reporting by Fergal Smith; Editing by Paul Simao)
  
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