August 29, 2019 / 7:56 PM / 3 months ago

CANADA FX DEBT-Loonie sticks to recent range ahead of domestic GDP data

 (Adds strategist quotes and details; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Canada's Q2 current account deficit narrows to C$6.4
billion
    * Price of U.S. oil increases 1.7%
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Aug 29 (Reuters) - The Canadian dollar edged higher
against a broadly stronger U.S. counterpart on Thursday, but
kept within its recent trading range ahead of domestic GDP data
that could guide expectations for next week's interest rate
decision by the Bank of Canada.
    At 3:24 p.m. (1924 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3299 to the greenback, or 75.19 U.S.
cents. The currency has traded over the last two weeks in a
range of 1.3225 to 1.3346.
    "We are mid-range here and just waiting for a bit more
direction either from the data tomorrow or from the Bank of
Canada next week," said Shaun Osborne, chief currency strategist
at Scotiabank.
    Gross domestic product data, due on Friday, is expected to
confirm that Canada's economy has rebounded after a slowdown
around the turn of the year. Analysts project second-quarter
growth of 3%.
    "I still rather think that the Canadian dollar looks
undervalued at these kind of levels and we should see good
support emerge for the Canadian dollar on minor declines,"
Osborne said.
    The U.S. dollar climbed against a basket of major currencies
       as news that Washington and Beijing were discussing
renewing their negotiations in September eased anxieties about
the ongoing trade war.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade.
    The price of oil was supported on Thursday by a deep draw on
U.S. crude inventories. U.S. crude oil futures        settled
1.7% higher at $56.71 a barrel.             
    Meanwhile, data from Statistics Canada showed that Canada's
current account deficit narrowed more than expected to C$6.4
billion in the second quarter from a revised C$16.6 billion in
the first quarter, on a lower deficit on goods.             
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries as global stocks
         rallied.                         
    The two-year            fell 3 Canadian cents to yield
1.346% and the 10-year             was down 26 Canadian cents to
yield 1.149%. Earlier this month, the 10-year yield hit its
lowest level since October 2016 at 1.083%.

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Leslie
Adler)
  
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