November 21, 2019 / 3:12 PM / 15 days ago

CANADA FX DEBT-Loonie rises after Poloz comments that monetary conditions appropriate

    * Canadian dollar at C$1.327 per USD
    * Canadian government bond yields higher across maturities

    By Kate Duguid
    NEW YORK, Nov 21 (Reuters) - The Canadian dollar
strengthened on Thursday, coming off six-week lows against its
U.S. counterpart after Bank of Canada Governor Stephen Poloz
said he believed current monetary conditions were appropriate. 
    In remarks at a fireside chat organized by the Ontario
Securities Commission in Toronto, the central banker said he
thought the central bank's policy fit the country's economic
situation.             
    Poloz's remarks come after BoC Senior Deputy Governor
Carolyn Wilkins on Tuesday said the global economy was facing
immense challenges that could spill over into Canada and that
the central bank had room to move interest rates lower. Currency
markets reacted by pushing the loonie to six-week lows in the
days following.             
    The Canadian dollar        was at C$1.327 to the greenback,
0.26% stronger than Wednesday's close at C$1.330. But trading
was range bound, with the loonie still about half a percent off
of where it had opened Tuesday prior to Wilkins' comments. 
    Canada's central bank shifted to a more dovish stance in
October as it cut its economic growth forecasts and expressed
concern about global trade risks.             
    China will strive to reach an initial trade agreement with
the United States as both sides keep communication channels
open, the Chinese commerce ministry said on Thursday, in an
attempt to allay fears talks might be unraveling.             
    Reports on Wednesday that the two countries were unlikely to
reach a "phase one" trade deal by the end of the year had
spurred a risk-off trade, bolstering the Japanese yen       ,
the Swiss franc        and hitting U.S. equities and Treasury
yields. By Thursday, some of those moves had reversed. 
    On Thursday morning, money markets were estimating an 11.61%
chance of a rate cut at the Bank of Canada's next policy meeting
on Dec. 4. Estimates on Wednesday were at approximately 20%.
    Canadian government bond yields were higher across
maturities with the two-year yield            up 3.5 basis
points to 1.550% and the benchmark 10-year yield             up
3.6 basis points to 1.468%. 

 (Reporting by Kate Duguid; Editing by Bernadette Baum)
  
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