July 24, 2019 / 8:15 PM / 2 months ago

CANADA FX DEBT-C$ holds near 1-month low as investors await U.S. data

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar falls 0.1% against the greenback
    * Price of U.S. oil decreases 1.6%
    * Canadian bond prices move higher across the yield curve

    By Levent Uslu
    TORONTO, July 24 (Reuters) - The Canadian dollar weakened
slightly on Wednesday against its U.S. counterpart, nearing a
one-month low it hit the previous day, as investors awaited U.S.
economic data that could help guide the Federal Reserve's
interest rate decision next week.
    The Fed is expected to cut interest rates by 25 basis points
at the end of the month but investors are not sure how much
additional easing to expect from the central bank through the
rest of the year.             
    "I think it's just a lot of wait-and-see until some of the
U.S. data points later this week. We have the U.S. durable goods
orders data tomorrow and the first look at the U.S. Q2 GDP on
Friday," said Erik Bregar, head of FX strategy at Exchange Bank
of Canada.
    The Bank of Canada has made clear that it has no intention
of cutting interest rates. But recent strengthening of the
Canadian dollar could ruin the central bank's plan to sit out
rate cuts by global peers.             
    At 3:14 p.m. (1914 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3145 to the greenback, or 76.07 U.S.
cents. The currency, which notched on Monday its weakest
intraday level in nearly one month at 1.3164, traded in a range
of 1.3119 to 1.3151.
    The loonie has lost some ground since hitting a near
nine-month high on Friday at 1.3016, pressured by
weaker-than-expected retail sales and wholesale trade data for
May.                        
    The price of oil, one of Canada's major exports, fell 1% on
Wednesday, failing to draw lasting support from a large decrease
in U.S. crude stockpiles as investors worried about global oil
demand. U.S. crude oil futures        settled 1.6% lower at
$55.88 a barrel.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 6 Canadian cents to yield
1.428% and the 10-year             rising 43 Canadian cents to
yield 1.452%.
    The 10-year yield touched its lowest intraday level since
July 4 at 1.452, while the gap between Canada's 10-year yield
and its U.S. counterpart widened by 1.9 basis points to a spread
of 59.6 basis points, the biggest gap since June 19.

 (Reporting by Levent Uslu)
  
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