November 1, 2019 / 8:39 PM / 9 months ago

CANADA FX DEBT-C$ pares weekly decline as trade optimism boosts oil prices

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar strengthens 0.1% against the greenback
    * Canadian factory activity expands for second straight
    * For the week, the loonie was down 0.6%
    * Price of U.S. oil increases 3.7%

    By Fergal Smith
    TORONTO, Nov 1 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Friday, reducing this week's
decline as investors grew more optimistic on prospects for a
trade deal between the United States and China and on the
outlook for economic growth.
    Canada exports many commodities, including oil, so its
economy could benefit from improved global growth prospects.
    U.S. stocks climbed and oil prices rose as signs emerged of
progress in U.S.-China trade talks, while an upbeat U.S. jobs
report and data on Chinese manufacturing lessened concerns about
slowing global growth.             
    U.S. crude oil futures        settled 3.7% higher at $56.20
a barrel.
    "We think USD-CAD could be on the brink of moving into a new
range below 1.30," said Daniel Katzive, head of FX strategy,
North America at BNP Paribas in New York. "Even though the Bank
of Canada tried to lean on the dovish side this week, the bottom
line is that they've been on hold and the rest of the G10 has
eased policy."
    Canadian manufacturing activity expanded in October for the
second consecutive month as new orders climbed, which could
temper concern at the Bank of Canada about the potential for
global trade conflicts to derail the domestic economy.
    On Wednesday, the Bank of Canada said that the country's
economy will be "increasingly tested" by trade uncertainty as it
left its benchmark interest rate on hold at 1.75%.
    Still, Federal Reserve easing since July has lowered the
range for its policy rate to below the Bank of Canada's
equivalent for the first time since December 2016.
    At 4:07 p.m. (2007 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3144 to the greenback, or 76.08 U.S.
cents. The currency, which was down 0.6% for the week, traded in
a range of 1.3140 to 1.3196.
    Investors have raised bullish bets on the loonie to the
highest level since December 2017, according to data from the
U.S. Commodity Futures Trading Commission and Reuters
calculations. As of Oct. 29, net long positions in the currency
had climbed to 43,589 contracts from 33,393 in the prior week.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 7 Canadian cents to yield 1.552% and the 10-year
            was down 34 Canadian cents to yield 1.448%.
    On Thursday, the 10-year yield hit a near three-week low
intraday at 1.399%.

 (Reporting by Fergal Smith; Editing by Daniel Wallis)
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