July 15, 2019 / 8:11 PM / 5 months ago

CANADA FX DEBT-Loonie pulls back from 9-month high as oil prices fall

    * (Adds strategist quote and details throughout; updates
prices)
    * Canadian dollar weakens 0.1% against the greenback
    * Price of U.S. oil decreases 1.1%
    * Canadian home sales fall 0.2% in June
    * Canadian bond prices rise across a flatter yield curve

    By Levent Uslu
    TORONTO, July 15 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday, retreating from Friday's
nine-month high, as oil prices were pressured by data showing
China's slowest economic growth in decades.
    The price of oil, one of Canada's major exports, fell as
China's data dimmed the outlook for crude demand. U.S. crude oil
futures        settled 1.1% lower at $59.58 a
barrel.            
    "Oil prices are lower and that obviously has a certain
negative impact on the Canadian dollar," said Rahim Madhavji,
president of Knightsbridge Foreign Exchange.
    At 3:36 p.m. (1936 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3049 to the greenback, or 76.63 U.S.
cents. The currency, which on Friday touched its strongest
intraday level since Oct. 25 at 1.3018, traded in a range of
1.3022 to 1.3052.
    The modest decline for the loonie came as data from the
Canadian Real Estate Association showed that resales of Canadian
homes fell 0.2% in June from the previous month.             
    Tightening of mortgage rules and interest rate hikes by the
Bank of Canada have weighed on Canada's once red-hot housing
market. Still, Canadian borrowers have benefited in recent
months from a slide in global bond yields.
    Last week, the Bank of Canada said the housing market was
stabilizing, as it left its benchmark interest rate steady at
1.75% and made clear it had no intention of easing monetary
policy.             
    The central bank's stance has contrasted with dovish
guidance last week from the U.S. Federal Reserve. Canada's
inflation report for June is due on Wednesday, which could offer
further clues on the outlook for Canadian interest rates.
    Speculators have raised bullish bets on the currency, data
from the U.S. Commodity Futures Trading Commission and Reuters
calculations showed on Friday. As of July 9, net long positions
rose to 9,226 contracts from 6,293 contracts in the prior week.
                
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 2.5 Canadian cents to yield 1.568% and the
10-year             was up 20 Canadian cents to yield 1.588%.
    On Friday, the 10-year yield touched its highest intraday
level in seven weeks at 1.649%.

 (Reporting by Levent Uslu; Additional reporting by Fergal
Smith; Editing by Peter Cooney)
  
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