May 27, 2019 / 8:34 PM / 6 months ago

CANADA FX DEBT-C$ sticks to narrow range in 'calm before the storm'

 (Adds dealer quotes and details on activity; updates prices)
    * Canadian dollar near flat at 1.3440 to the greenback
    * Price of U.S. oil rises 1%
    * Canada's 10-year hits a nearly two-month low at 1.594%

    By Fergal Smith
    TORONTO, May 27 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Monday, trading in a
narrow range due to lighter than usual liquidity conditions and
ahead of a Bank of Canada interest rate decision later in the
week.
    At 4:08 p.m. (2008 GMT), the Canadian dollar          was
nearly unchanged at 1.3440 to the greenback, or 74.40 U.S.
cents. The currency, which gained 0.2% last week, traded between
1.3430 and 1.3453.
    The narrow range came in subdued trading because of market
holidays in London and New York.             
    "There is not a lot of liquidity out there to see any
activity," said Brad Schruder, director of corporate sales and
structuring at BMO Capital Markets. "It's potentially the calm
before the storm because Canada has a very important and
impactful calendar this week."
    The Bank of Canada is widely expected to leave its benchmark
interest rate unchanged on Wednesday at 1.75% as it weighs
developments in household spending, oil markets and global trade
policy.             
    The central bank, which has kept the rate on hold since
October after having tightened by 125 basis points since July
2017, has projected that the economy barely grew in the first
three months of the year. Canada's first quarter gross domestic
product data is due on Friday.
    Canada took a first step toward ratifying the new North
American trade agreement three days ahead of U.S. Vice President
Mike Pence's trip to Ottawa to discuss passage of the treaty.
Canada sends about 75% of its exports to the United States,
including oil.                 
    Oil prices were boosted on Monday by Middle East tensions
and OPEC-led supply cuts as well as continued crude disruptions
from Russia after a contamination problem discovered last month.
U.S. crude oil futures        were up 1% at $59.24 a barrel.
            
    Speculators have cut their bearish bets on the Canadian
dollar to the lowest since March, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday. As of May 21, net short positions had fallen to 42,236
contracts from 47,588 in the prior week.             
    Canadian government bond prices were higher across a flatter
yield curve. The 10-year             rose 19 Canadian cents to
yield 1.594%, its lowest yield since March 29.

 (Reporting by Fergal Smith
Editing by Andrea Ricci and Sonya Hepinstall)
  
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