November 28, 2016 / 10:07 PM / in a year

CANADA FX DEBT-C$ tracks oil higher; Poloz indicates high bar to cut

(Adds analyst quotes and details on comments by Bank of Canada
Governor Stephen Poloz, updates prices)
    * Canadian dollar ends at C$1.3421, or 74.51 U.S. cents
    * Loonie touches its strongest since Nov. 22 at C$1.3397
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, Nov 28 (Reuters) - The Canadian dollar strengthened
to a nearly one-week high against its U.S. counterpart on Monday
as oil rallied ahead of a meeting of major oil producers, while
Bank of Canada Governor Stephen Poloz indicated a high bar to
cut interest rates.
    U.S. crude prices settled up $1.02 at $47.08 a
barrel, recouping losses in a volatile session as the market
reacted to the shaky prospect of the Organization of the
Petroleum Exporting Countries being able to agree to output cuts
at a meeting on Wednesday. 
    "I almost feel sorry for the dollar-Canada traders because
they are literally getting whipped around by one OPEC headline
after another," said Michael Goshko, corporate risk manager at
Western Union Business Solutions.
    Oil is on of Canada's major exports.
    It would take a significant disruption to the Bank of
Canada's outlook on inflation for the bank to consider more
stimulus, Poloz said. 
    The central bank considered a cut last month before holding
its policy rate steady at 0.50 percent. It last cut in July
2015.
    The Canadian dollar ended at C$1.3421 to the
greenback, or 74.51 U.S. cents, stronger than Friday's close of
C$1.3527, or 73.93 U.S. cents.
    The currency's weakest level of the session was C$1.3537,
while it touched its strongest since Nov. 22 at C$1.3397.
    Poloz will give a speech on Monday evening at the C.D. Howe
Institute in Toronto. His prepared remarks were to be released
at 7:45 p.m. EST (0045 on Tuesday GMT).
    The governor of Canada's central bank is likely to be
pressed on what the Nov. 8 U.S. election of Donald Trump means
for Canada, particularly its export sector, which has long been
key to the central bank's outlook.
    "When someone talks about rewriting trade agreements, with
the huge orientation of our economy towards exports,
specifically to the United States, we're a bit of a sitting
duck," Goshko said.
    Trump has said he wants to renegotiate the North American
Free Trade Agreement (NAFTA).
    The market is underestimating the prospect of further
interest rate cuts from the Bank of Canada, some economists
said, as an uncertain outlook for NAFTA risks derailing an
expected pickup in Canada's business spending.    
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
 bond rose 1.5 Canadian cents to yield 0.663 percent
and the benchmark 10-year climbed 40 Canadian cents
to yield 1.523 percent.
    Last week, the 10-year yield touched an 11-month high at
1.614 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and
Jonathan Oatis)

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