November 21, 2019 / 9:38 PM / 21 days ago

CANADA FX DEBT-Canadian dollar rebounds as Poloz cools rate cut bets

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.2% against the U.S. dollar
    * Price of U.S. oil increases by 2.4%
    * Canadian government bond prices fall

    By Fergal Smith
    TORONTO, Nov 21 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, recovering from a
six-week low it hit the day before as Bank of Canada Governor
Stephen Poloz doused expectations for an interest rate cut as
soon as next month.
    In remarks at a fireside chat organized by the Ontario
Securities Commission in Toronto, Poloz said he thought Canada's
monetary conditions were about right given the current economic
situation that is being challenged by global trade tensions.
            
    "The Poloz comments were quite powerful," said Alvise
Marino, a foreign exchange strategist at Credit Suisse in New
York. "It was a little bit of a surprise given that Wilkins'
comments from Tuesday had been interpreted in a dovish
direction."
    On Tuesday, BoC Senior Deputy Governor Carolyn Wilkins 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.             
    The bank in October left its benchmark interest rate
unchanged at 1.75% but left the door open to a possible cut over
the coming months.             
    Chances of a rate cut at the bank's next policy meeting on
Dec. 4 fell to about 10% from more than 20% on Wednesday, data
from the overnight index swaps market showed.           
    At 4:01 p.m. (2101 GMT), the Canadian dollar          was
trading 0.2% higher at 1.3283 to the greenback, or 75.28 U.S.
cents. The currency, which hit a near six-week low on Wednesday
at 1.3328, traded in a range of 1.3269 to 1.3325.
    The gain for the loonie came as U.S. House Democrats said
they ironed out some differences with the Trump administration
about a trade agreement with Canada and Mexico, and that
Congress could still vote on the deal - one of President Donald
Trump's top priorities - this year.             
    Canada sends about 75% of its exports to the United States,
including oil.
    U.S. crude oil futures        rose 2.4% to $58.35 a barrel,
boosted by a Reuters report that OPEC and its allies are likely
to extend output cuts until mid-2020 and positive news on U.S.-
China trade negotiations.             
    Canadian government bond prices were lower across the yield
curve, with the 10-year             falling 39 Canadian cents to
yield 1.474%. On Wednesday, the 10-year yield hit its lowest
intraday level in nearly six weeks at 1.394%.
    Canadian retail sales data is due on Friday.

 (Additional reporting by Kate Duguid; Editing by Bernadette
Baum and Marguerita Choy)
  
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