July 9, 2019 / 2:02 PM / 5 months ago

CANADA FX DEBT-C$ slips for third day ahead of BoC rate decision

    * Canadian dollar falls 0.2% against the greenback
    * Canadian housing starts surge in June
    * Price of U.S. oil decreases 0.3%
    * Canada's 10-year yield touches a 5-week high at 1.594%

    TORONTO, July 9 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as the greenback broadly
climbed and as investors, who have recently turned bullish on
the loonie, awaited an interest rate decision on Wednesday by
the Bank of Canada.
    The Bank of Canada is widely expected to leave its benchmark
interest rate on hold at 1.75%, despite expected policy-easing
as soon as this month by the U.S. Federal Reserve. The central
bank has said that there was evidence that a slowdown in the
domestic economy was temporary.        
    The U.S. dollar        gained against a basket of major
currencies as investors re-assessed their expectations of how
much the Fed may cut interest rates this month. Fed Chief Jerome
Powell is due to testify before Congress on Wednesday.
            
    The price of oil, one of Canada's major exports, was
pressured by worries about the U.S.-China trade dispute that has
been dragging down the global economy and oil demand. U.S. crude
oil futures        fell 0.3% to $57.5 a barrel.             
    At 9:42 a.m. (1342 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3127 to the greenback, or 76.18 U.S.
cents. It was the third straight session that the currency has
declined, after it notched last Thursday an eight-month high at
1.3038.
    The loonie traded on Tuesday in a range of 1.3093 to 1.3135.
   
    Speculators have turned bullish on the Canadian dollar for
the first time since March 2018, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Monday. As of July 2, there were 6,293 contracts net long the
loonie, which is a swing from 14,790 contracts net short the
currency in the prior week.                                 
    Canadian housing starts rose much more than expected in
June, to a seasonally adjusted annualized rate of 245,657 units,
the Canadian Mortgage and Housing Corporation (CMHC) said.
            
    Separate data from Statistics Canada showed that the value
of building permits fell by 13% in May from April, largely due
to the value of permits in British Columbia returning to recent
levels following a surge in April.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 2 Canadian cents to yield
1.662% and the 10-year             rising 2 Canadian cents to
yield 1.578%.
    The 10-year yield touched its highest intraday since May 30
at 1.594%.           

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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