October 18, 2018 / 8:48 PM / 2 months ago

CANADA FX DEBT-C$ hits 5-week low versus broadly stronger greenback

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar declines 0.3 percent against the greenback
    * Price of U.S. oil falls 1.6 percent
    * Loonie touches its weakest since Sept. 11 at 1.3089
    * Canada-U.S. 10-year spread widens by 3 basis points

    By Fergal Smith
    TORONTO, Oct 18 (Reuters) - The Canadian dollar weakened to
a five-week low against its U.S. counterpart on Thursday as the
greenback broadly climbed and oil prices added to a sharp
decline the previous day.
    At 4:12 p.m. (2012 GMT), the Canadian dollar          was
trading 0.3 percent lower at 1.3070 to the greenback, or 76.51
U.S. cents. The currency touched its weakest level since Sept.
11 at 1.3089.
    The decline for the loonie was driven by strengthening of
the U.S. dollar rather than "anything Canada-specific," said
Greg Anderson, global head of foreign exchange strategy for BMO
Capital Markets in New York.
    The U.S. dollar        rose to a nine-day high against a
basket of currencies as worries about Italy's budget weighed on
the euro.             
    Meanwhile, the price of oil was pressured by an escalating
trade dispute between China and the United States and data
showing ample supplies. U.S. crude oil futures        settled
1.6 percent lower at $68.65 a barrel.             
    Oil is one of Canada's major exports, but crude's impact on
the loonie tends to weaken if it is not trading at levels needed
to affect investment in Canada's energy sector.                 
    "Correlations between oil and USD-CAD have started to
accelerate after being dormant and dead for most of the last 12
months," Anderson said.              
    Canada added 28,800 jobs in September, helped by a pickup in
hiring in the trade, education and healthcare industries,
according to a report from ADP. The number of jobs added in
August was revised higher to 42,700 from 13,600.                
    Canadian inflation data for September and the August retail
sales report are due on Friday, which could help guide
expectations for additional interest rate hikes from the Bank of
Canada.
    Economists expect the central bank to hike next week for the
fifth time since July 2017, a Reuters poll showed.             
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 25 Canadian
cents to yield 2.494 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 3 basis points to a spread of 68.5 basis
points in favor of the U.S. bond.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Jonathan Oatis)
  
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