February 27, 2020 / 9:02 PM / in a month

CANADA FX DEBT-Loonie sinks to nearly 6-month low on lower oil prices, coronavirus worries

    * Oil prices fall for fifth day to lowest in a year
    * Canadian govt bond prices rise across the maturity curve

 (Adds analyst quote and details on activity, updates prices)
    By Saqib Iqbal Ahmed
    Feb 27 (Reuters) - The Canadian dollar slipped to a near
six-month low against its U.S. counterpart on Thursday as oil
prices fell for a fifth straight day on a rise in new
coronavirus cases outside China that fueled fears of a pandemic.
    At 3:40 p.m. EST (2040 GMT), the Canadian dollar         
was trading down about 0.3% at 1.3371 to the greenback, or 74.79
U.S. cents, its lowest since Sept. 3.
    Oil prices tumbled to their lowest since January 2019, as
further novel coronavirus cases outside China fanned fears that
a pandemic could slow the global economy and erode demand for
crude. Oil is one of Canada's major exports.             
    No country should make the "fatal mistake" of assuming it
will be spared the coronavirus, the World Health Organization
said on Thursday, as governments from Iran to Australia raced to
contain the epidemic's rapid global spread.             
    Asia reported hundreds of new cases, Brazil confirmed Latin
America's first infection and the new disease - COVID-19 - was
also detected for the first time in Pakistan, Sweden, Norway,
Greece, Romania and Algeria. 
    "While U.S.-Canadian interest rate differentials continue to
move against the U.S. dollar, weaker crude oil prices are a
clear headwind for the Canadian dollar," Shaun Osborne, chief FX
strategist at Scotiabank in Toronto, said in a note.
    Canada's current account deficit narrowed to C$8.76 billion
($6.56 billion) in the fourth quarter from a revised C$10.86
billion deficit in the third quarter, on a lower trade deficit
on goods, Statistics Canada said on Thursday.             
    The loonie is also bracing for Canada's GDP data for
December, which is scheduled for release on Friday and is
expected to have remained unchanged at 0.1%.             
    "A downside surprise to Q4 GDP would increase the likelihood
of Canada cutting interest rates," said Joe Manimbo, senior
market analyst at Western Union Business Solutions.
    Canadian government bond prices rose across the maturity
curve, with the two-year            price up 100.441 Canadian
cent to yield 1.266% and the benchmark 10-year            
rising 0.472 Canadian cents to yield 1.168%.

 (Reporting by Saqib Iqbal Ahmed; Editing by Nick Zieminski and
Peter Cooney)
  
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