July 8, 2019 / 7:26 PM / in a year

CANADA FX DEBT-C$ dips on Fed testimony uncertainty, BoC rate decision due Wednesday

 (Adds strategist quote and details throughout, updates prices)
    * Canadian dollar weakens 0.1% against the greenback
    * Price of U.S. oil increases 0.3%
    * Canadian bond prices trade mixed across a flatter yield
    * Canada-U.S. 2-year spread hit its narrowest since January

    By Fergal Smith
    TORONTO, July 8 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday as the greenback broadly
gained, but the loonie held near last week's eight-month high
ahead of an interest rate decision on Wednesday from the Bank of
    The U.S. dollar        hovered at a three-week high against
a basket of major currencies as traders awaited Fed Chairman
Jerome Powell's testimony this week before Congress for clues
about a rate decrease.             
    "The reason the dollar is up against most majors, the
Canadian dollar in particular, is just that there are these
concerns about what Fed Chairman Powell will say this week,"
said Alfonso Esparza, senior currency analyst at OANDA.
    Data on Friday showing a stronger-than-expected increase in
U.S. jobs in June has scaled back traders' expectations of a
sharp Fed rate cut at the end of July.             
    At 2:55 p.m. (1855 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3094 to the greenback, or 76.37 U.S.
    The currency, which on Thursday touched its strongest since
Oct. 25, last year at 1.3038, traded in a range of 1.3050 to
    Canada's employment report was also released on Friday. It
showed that wages jumped in June by the most in more than a year
- a sign of strength analysts said ruled out the chances of the
Bank of Canada cutting interest rates this week.             
    The central bank will keep its key interest rate on hold at
1.75% through to the end of next year at least, according to a
Reuters poll, diverging from expected easing from the U.S.
Federal Reserve.                         
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            price down 8 Canadian
cents to yield 1.668% and the 10-year             rising 4
Canadian cents to yield 1.567%.
    The gap between Canada's 2-year yield and its U.S.
counterpart narrowed by 4.6 basis points to a spread of 20.4
basis points in favor of the U.S. bond, its smallest gap since
January 2018.   
    The price of oil, one of Canada's major exports, was
supported by tensions over Iran's nuclear program but gains were
tempered by global economic growth concerns. U.S. crude oil
futures        settled 0.3% higher at $57.66 a barrel.

 (Additional reporting by Levent Uslu
Editing by Nick Zieminski and Sandra Maler)
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