October 25, 2019 / 7:45 PM / 10 months ago

REFILE-CANADA FX DEBT-C$ pads weekly gain as investors see BoC as odd man out

 (Refiles to add dropped name of strategist's bank in paragraph
    * Canadian dollar rises 0.1% against the greenback
    * For the week, the loonie was up 0.5%
    * Price of U.S. oil increases 0.8%
    * Canadian government bond prices fall across the yield

    By Fergal Smith
    TORONTO, Oct 25 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Friday, adding to this week's
gain as oil prices rose and investors looked for the Bank of
Canada to stick to its divergent path from other central banks.
    Canada's central bank is expected to leave its benchmark
interest rate unchanged at 1.75% at a rate decision next
Wednesday and through the rest of the year, a Reuters poll
    Also next Wednesday, the U.S. Federal Reserve is seen easing
for the third time since July. That could lower the range for
the Fed's benchmark rate below the Bank of Canada's equivalent
rate for the first time since December 2016.
    "What stands out is that everybody else is easing and the
BoC is not," said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets in New York.
    The European Central Bank, the Reserve Bank of Australia and
the Reserve Bank of New Zealand are among other central banks to
have eased monetary policy this year.
    The divergence in policy and the rally this week in the
price of oil, one of Canada's major exports, have been positive
for the Canadian dollar, Anderson said.
    Oil prices rose as support from falling U.S. crude
inventories, optimism over a U.S.-China trade deal and possible
action from OPEC and its allies to extend output cuts outweighed
broader economic concerns. U.S. crude oil futures        settled
0.8% higher at $56.66 a barrel.
    At 3:17 p.m. (1917 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3061 to the greenback, or 76.56 U.S.
cents. The currency, which posted on Thursday its strongest
intraday level in more than three months at 1.3053, traded in a
narrow range of 1.3058 to 1.3077.
    For the week, the loonie was up 0.5%.
    The gain this week for the loonie came as Canadian Prime
Minister Justin Trudeau's Liberal party won Monday's federal
election but lost its majority in Parliament.
    Trudeau has since promised to continue with the Trans
Mountain pipeline expansion, which could get more of Canada's
oil to international markets and to prioritize a tax cut for the
middle class.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 5.5 Canadian cents to yield 1.66% and the 10-year
            was down 13 Canadian cents to yield 1.537%.

 (Reporting by Fergal Smith
Editing by Chizu Nomiyama and Tom Brown)
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