July 29, 2019 / 7:51 PM / 2 months ago

CANADA FX DEBT-C$ ends six-day losing streak ahead of Fed rate decision

 (Adds strategist quote and details throughout, updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie gains for the first time since July 18
    * U.S. oil prices increase 1.2%
    * Bond prices move lower across the yield curve

    By Levent Uslu
    TORONTO, July 29 (Reuters) - The Canadian dollar edged
slightly higher against its U.S. counterpart on Monday, with the
currency on track to break its six-day losing streak as
investors awaited a potential 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.             
    "It's just a holding period (for the loonie) ahead of the
Fed" said Erik Nelson, a currency strategist at Wells Fargo.
    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 3:33 a.m. (1933 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3156 to the greenback, or 76.01 U.S.
cents. The currency, which touched on Friday a month-low
intraday at 1.3199, traded in a range of 1.3149 to 1.3182.
    The last time the loonie gained was July 18.
    Meanwhile, the price of oil, one of Canada's major exports,
increased on Monday as the prospect of an expected interest rate
cut by the U.S. Federal Reserve overshadowed pessimism over
U.S.-China trade talks and worries about slower global economic
growth. U.S. crude oil future        settled 1.2% higher at
$56.87 a barrel.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 1 Canadian cent to
yield 1.478% and the 10-year             falling 3 Canadian
cents to yield 1.469%.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 2.9 basis points to a spread of 58.6
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 Tom Brown)
  
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