October 28, 2019 / 9:56 PM / a month ago

CANADA FX DEBT-Loonie holds near 3-month high ahead of interest rate decisions

 (Adds dealer quote and details throughout; updates prices)
    * Loonie touches its strongest since July 22 at 1.3050
    * Price of U.S. oil decreases 1.5%
    * Canadian bond prices fall across the yield curve

    By Fergal Smith
    TORONTO, Oct 28 (Reuters) - The Canadian dollar was little
changed against the greenback on Monday, holding near an earlier
three-month high as investors grew optimistic on a U.S.-China
trade deal and ahead of an interest rate decision this week from
the Bank of Canada.
    At 5 p.m. (2100 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3056 to the greenback, or 76.61
U.S. cents. The currency, which rose 0.5% last week, touched its
strongest intraday level since July 22 at 1.3050.
    "I think we are going to be treading water until we get the
central bank announcements now," said Amo Sahota, director at
Klarity FX in San Francisco.
    Both the Bank of Canada and the Federal Reserve are due to
make policy announcements on Wednesday.     
    The S&P 500 hit a record high as a more civil tone between
the United States and China lifted hopes for a possible trade
deal and investors looked toward a Fed rate cut.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for global
trade. U.S. crude oil futures        settled 1.5% lower at
$55.81 a barrel amid expectations for higher U.S. crude
stockpiles.             
    The Bank of Canada has left its benchmark interest rate on
hold this year at 1.75% as the domestic economy added jobs at a
robust pace and inflation stayed close to its 2% target.
    The central bank is expected to wait until the first quarter
of next year before cutting rates, a Reuters poll
showed.                              
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 9.5 Canadian cents to
yield 1.71% and the 10-year             falling 74 Canadian
cents to yield 1.619%.
    The 10-year yield touched its highest intraday level since
July 16 at 1.628%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and Peter
Cooney)
  
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