June 6, 2018 / 7:57 PM / in 18 days

CANADA FX DEBT-C$ climbs on trade data, pares gains ahead of G7 summit

 (Adds strategist quote and details on activity; updates prices)
    * Canadian dollar at C$1.2947, or 77.24 U.S. cents
    * Loonie touches its strongest since May 31 at C$1.2857
    * Canada's trade deficit shrinks to six-month low
    * Bond prices lower across yield curve

    By Fergal Smith
    TORONTO, June 6 (Reuters) - The Canadian dollar strengthened
to a near one-week high against its U.S. counterpart on
Wednesday as domestic data showed a narrower-than-expected trade
deficit but some gains were pared ahead of this week's G7
summit.
    Canada's trade deficit in April shrank to a six-month low of
C$1.90 billion from C$3.93 billion in March, as exports climbed
to a record high and imports dropped, Statistics Canada said.
The shortfall was considerably less than the C$3.40 billion
deficit forecast by analysts.             
    At 3:40 p.m. EDT (1940 GMT), the Canadian dollar         
was trading 0.2 percent higher at C$1.2947 to the greenback, or
77.24 U.S. cents.
    The loonie touched its strongest since May 31 at C$1.2857
but pared its gains.
    "I think there is some uncertainty as regards trade you can
pin that on, especially given the fact that we do have an
important G7 summit coming up this weekend," said Bipan Rai,
North America Head of FX Strategy at CIBC Capital Markets. 
    Top U.S. allies are set for a showdown with Washington at
this week's G7 summit in Canada as the Trump administration
shows no sign of backing down from protectionist policies that
have upset trading partners and unnerved investors.             
    The U.S. dollar fell against a basket of major currencies
       after officials said the European Central Bank could wind
down its stimulus program by end-2018, boosting the euro.
                
    The price of oil, one of Canada's major exports, fell even
after Venezuela raised the prospect of a halt to some crude
exports.             
    U.S. crude oil futures        settled 1.2 percent lower at
$64.73 a barrel.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries and German Bunds. The
two-year            fell 5 Canadian cents to yield 1.944 percent
and the 10-year             declined 52 Canadian cents to yield
2.312 percent.
    The value of Canadian building permits fell 4.6 percent in
April from March, the biggest drop in five months.             
Canada's employment report for May is due on Friday.

    
 (Reporting by Fergal Smith
Editing by James Dalgleish)
  
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