July 29, 2019 / 2:15 PM / 2 months ago

CANADA FX DEBT-C$ rebounds from 1-month low ahead of Fed rate decision

    * Canadian dollar rises 0.1% against the greenback 
    * U.S. oil prices increase 0.4%
    * Bond prices move higher across the yield curve

    TORONTO, July 29 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday, recovering
from a one-month low it hit on Friday, ahead of a widely
expected Federal Reserve interest rate cut this week.  
    The Fed is expected to cut interest rates by 25 basis points
this week, for what would be the first rate cut since the
financial crisis.             
    Earlier this month, the Bank of Canada diverged from some
other major central banks, making clear it had no intention of
easing monetary policy as it left its benchmark interest rate on
hold at 1.75%.             
    At 9:26 a.m. (1326 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3150 to the greenback, or 76.05 U.S.
cents. The currency on Friday touched its weakest intraday level
in nearly one month at 1.3199. 
    Meanwhile, the price of oil, one of Canada's major exports,
rose on Monday despite pessimism over U.S.-China trade talks and
the prospect of slower economic growth globally that could
reduce demand for crude. U.S. crude oil futures        were up
0.4% at $56.44 a barrel.             
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. treasuries. The two-year           
rose 1 Canadian cent to yield 1.468% and the 10-year            
was up 8 Canadian cents to yield 1.457%.
     The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 2.5 basis points to a spread of 59 basis
points in favor of the U.S. bond. On Friday, it touched its
widest gap in nearly five weeks at 61.5 basis points.

 (Reporting by Levent Uslu; editing by Jonathan Oatis)
  
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