September 19, 2018 / 1:37 PM / 2 years ago

CANADA FX DEBT-C$ nears 3-week high; pares gains ahead of NAFTA trade talks

    * Canadian dollar rises 0.1 percent against greenback
    * Loonie touches strongest since Aug 30 at 1.2934
    * Canadian bond prices dip across the yield curve
    * 10-year yield near four-month high at 2.390 percent

    TORONTO, Sept 19 (Reuters) - The Canadian dollar
strengthened to its highest in nearly three weeks against its
U.S. counterpart on Wednesday, before paring most of its gains
ahead of further talks to revamp the NAFTA trade pact.
    Canadian Foreign Minister Chrystia Freeland is due to hold
fresh talks on the North American Free Trade Agreement with U.S.
Trade Representative Robert Lighthizer in Washington as a
U.S.-imposed deadline of Oct. 1 looms.             
    Canada sends about 75 percent of its exports to the United
States and runs a current account deficit, so its economy could
be hurt if a deal on NAFTA is not reached, or by an escalating
trade dispute between the United States and China.
    Bets that the U.S.-China trade spat would inflict less
damage than feared helped boost global equities for a second
straight day.             
    At 9:02 a.m. (1302 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.2966 to the greenback, or 77.12
U.S. cents. The currency touched its strongest since Aug. 30 at
    The near three-week high for the Canadian dollar came after
stronger-than-expected domestic manufacturing data on Tuesday
supported prospects for another Bank of Canada interest rate
hike next month.           
    Also supportive of the loonie was recent strength in the
price of oil, one of Canada's major exports.
    U.S. crude oil futures        rose 0.1 percent to $69.93,
holding near its highest level over the last two months, as
concerns producers may fail to cover a supply shortfall once
U.S. sanctions on Iran come into force outweighed an increase in
U.S. inventories.                 
    Canadian government bond prices edged lower across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
dipped 2 Canadian cents to yield 2.390 percent, its highest
since May 25.
    Canada's inflation report for August and July retail sales
data are due on Friday.        

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
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