November 20, 2019 / 9:11 PM / 16 days ago

CANADA FX DEBT-Loonie hits 6-week low as BoC's more dovish stance weighs

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.3% against the greenback
    * Canada's annual inflation rate holds steady at 1.9% in
October
    * Canadian bond prices rise across a flatter yield curve

    By Fergal Smith
    TORONTO, Nov 20 (Reuters) - The Canadian dollar weakened to
a near six-week low against the greenback on Wednesday, on
continued concerns over an interest rate cut following dovish
comments by a senior Bank of Canada official on Tuesday.
    At 3:40 p.m. (2040 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3304 to the greenback, or 75.17 U.S.
cents. The currency touched its weakest intraday level since
Oct. 10 at 1.3328.
    On Tuesday, Bank of Canada Senior Deputy Governor Carolyn
Wilkins said the global economy is facing immense challenges
that could spill over into Canada and that the central bank has
room to move interest rates lower.                  
    "The real impetus is Wilkins' comments yesterday, keeping
concerns alive over a potential BoC cut in December or early
2020," said Erik Nelson, a currency strategist at Wells Fargo in
New York. "Then we had this latest run-up in USD-CAD amid some
of the trade concerns."
    Canada's central bank shifted to a more dovish stance in
October as it cut its economic growth forecasts and expressing
concern about global trade uncertainty.             
    Money markets see about a 20% chance of a Bank of Canada
interest rate cut at the central bank's next policy meeting on
Dec. 4. Chances of a cut in January are seen at more than 50%.
           
    Worries that a "phase one" trade deal between Washington and
Beijing may not be completed this year weighed on Wall Street.
            
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so its economy could be
hurt by a slowdown in the global flow of capital or trade.
    U.S. crude oil futures        rose more than 3% after a
better-than-expected U.S. crude inventories report and as Russia
said it would continue its cooperation with OPEC to keep the
global oil market balanced.             
    Data from Statistic Canada showed that the country's annual
inflation rate held steady in October at 1.9% as expected,
marking the third straight month of little change.             
    Bank of Canada Governor Stephen Poloz is due to speak on
Thursday on economic change.        
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 1 Canadian cent to yield 1.512% and the 10-year
            was up 16 Canadian cents to yield 1.428%.
    The 10-year yield touched its lowest intraday level since
Oct. 10 at 1.394%.        

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and
Leslie Adler)
  
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