June 17, 2019 / 8:10 PM / 4 months ago

CANADA FX DEBT-C$ sticks to narrow range ahead of Fed interest rate decision

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar trades near flat against the greenback
    * Price of U.S. oil decreases 1.1%
    * Foreign investors sell Canadian securities in April
    * Canadian bond prices dip across much of flatter yield
curve

    By Fergal Smith
    TORONTO, June 17 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Monday, holding near
Friday's eight-day low as oil prices fell and investors awaited
a Federal Reserve policy meeting later in the week.
    At 3:44 p.m. (1944 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3413 to the greenback, or 74.55
U.S. cents.
    The currency, which on Friday touched its weakest level in
more than a week at 1.3424, traded in a narrow range of 1.3394
to 1.3420.
    "The natural home is going to be the 1.33 to 1.35 range for
the coming weeks," said Christian Lawrence, senior market
strategist at Rabobank. "So much of it is going to be dependent
on the Fed on Wednesday."
    The U.S. Federal Reserve, facing fresh demands by President
Donald Trump to cut interest rates, is expected to leave
borrowing costs unchanged at an interest rate decision on
Wednesday but possibly lay the groundwork for a rate cut later
this year.             
    In contrast, the Bank of Canada has signaled in recent weeks
that it would remain on the sidelines as it monitors economic
developments.
    "Canadian data is holding up well enough for the Bank of
Canada to not adopt a dovish bias, but the underlying trend is
much weaker," Lawrence said.
    Flexible exchange rates are a key reason for the Canadian
central bank's success in targeting inflation and will remain an
important part of the monetary policy framework, Bank of Canada
Deputy Governor Lawrence Schembri said.             
    Canada's inflation report for May is due on Wednesday. 
    The price of oil, one of Canada's major exports, fell after
weaker Chinese economic figures fanned fears of lower worldwide
oil demand. U.S. crude oil futures        settled 1.1% lower at
$51.93 a barrel.                
    Canada looks set this week to approve a hotly debated plan
to expand an oil pipeline, people familiar with the process told
Reuters, but the move is unlikely to help Prime Minister Justin
Trudeau rebuild flagging support ahead of an October election.
            
    Foreign investors sold a net C$12.80 billion in Canadian
securities in April, led by equities, following a revised C$1.56
billion total divestment in March, Statistics Canada said.
            
    Canadian government bond prices were lower across much of a
flatter yield curve, with the two-year            down 3
Canadian cents to yield 1.398% and the benchmark 10-year
            falling 8 Canadian cents to yield 1.444%.

 (Reporting by Fergal Smith; Editing by Susan Thomas and Peter
Cooney)
  
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