September 13, 2019 / 2:00 PM / a month ago

CANADA FX DEBT-Loonie hits 1-week low as household debt burden climbs

    * Canadian dollar falls 0.2% against the greenback
    * For the week, the loonie was on track to fall 0.5% 
    * Canada's household debt-to-income reaches a record 174.1%
in Q2
    * Canada's 10-year yield touches a six-week high at 1.490%

    By Fergal Smith
    TORONTO, Sept 13 (Reuters) - The Canadian dollar weakened to
a one-week low against its U.S. counterpart on Friday as data
showed a rising debt service burden for Canadians that could
crimp their spending.
    The ratio of Canadian household debt-to-income widened to a
record 174.1% in the second quarter from a downwardly revised
172.8% in the first quarter, while the debt service ratio rose
to 14.9%, data from Statistics Canada showed.             
    "That means there's now a reduced share of disposable income
left for households to spend on things other than debt
servicing," Krishen Rangasamy, a senior economist at National
Bank Financial, said in a note.
    The Bank of Canada has worried that a pick-up in housing
activity, due to lower mortgage rates in recent months, could
add to the debt burden of Canadians.
    The high debt loads and depleted savings of Canadians look
set to crimp their spending for as long as decades, economists
say.                 
    At 9:22 a.m. (1322 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3233 to the greenback, or 75.57 U.S.
cents. The currency touched its weakest intraday level since
last Friday at 1.3242.
    The decline for the loonie came as the greenback        got
a boost from data showing higher U.S. retail sales.             
    For the week, the loonie was on track to fall 0.5%,
pressured by a drop in the price of oil, one of Canada's major
exports.
    Oil steadied on Friday after a three-day losing streak as
hints of progress in the U.S.-China trade dispute balanced
concerns about slowing global economies and oil demand. U.S.
crude oil futures        were up 0.1% at $55.13 a barrel.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 3.5 Canadian cents to yield 1.625% and the 10-year
            was down 18 Canadian cents to yield 1.468%.
    The 10-year yield touched its highest intraday level since
Aug. 1 at 1.490%.      

 (Reporting by Fergal Smith; Editingnby Steve Orlofsky)
  
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