February 16, 2018 / 10:04 PM / 2 years ago

CANADA FX DEBT-C$ pulls back from 11-day high as greenback rallies

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar at C$1.2557, or 79.64 U.S. cents
    * Loonie touches its strongest level since Feb. 5 at
    * Bond prices higher across a flatter yield curve
    * Canada-U.S. 2-year spread touches widest since Nov. 30

    By Fergal Smith
    TORONTO, Feb 16 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday, pulling back from an
earlier 11-day high as the greenback broadly climbed and
domestic data showed a drop in manufacturing sales.
    The U.S. dollar        limped back from a three-year low
against a basket of currencies but still marked its fifth weekly
loss out of seven weeks this year.             
    "Canada is getting pulled around by the broader (U.S.)
dollar move," said Blake Jespersen, managing director, foreign
exchange sales at BMO Capital Markets. "Canadian fundamentals
aren't really shining through at the moment."
    Canadian factory sales slipped 0.3 percent in December after
recording a huge jump in November, pulled down by weakness in
petroleum and coal products as well as food manufacturing,
Statistics Canada said.             
    Speculators cut bullish bets on the Canadian dollar for the
first week in six, data from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed. As of Feb. 13, net
long positions had fallen to 32,529 contracts from 40,164 a week
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading 0.6 percent lower at C$1.2557 to the greenback, or 79.64
U.S. cents.
    The currency's weakest level of the session was C$1.2567,
while it touched its strongest level since Feb. 5 at C$1.2451.
    For the week, the commodity-linked loonie was headed for a
0.2 percent gain. It fell 1.2 percent last week, when global
stocks had slumped.
    Wall Street squeezed out a gain on Friday to extend this
week's rebound.             
    The price of oil, one of Canada's major exports, also
climbed. U.S. crude oil prices settled 0.6 percent higher at
$61.68 a barrel.                      
    In separate data, foreign investment in Canadian securities
slipped slightly in December after five strong months but
international demand over the year was high enough to set an
annual record.             
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 5 Canadian cents to
yield 1.823 percent and the 10-year             rising 45
Canadian cents to yield 2.319 percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent widened by 3.6 basis points to a spread of -37.1
basis points, its widest since June 27.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and
Sandra Maler)
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