May 2, 2017 / 1:39 PM / in 7 months

CANADA FX DEBT-C$ hits new 14-month low as stops triggered

    * Canadian dollar at C$1.3709, or 72.94 U.S. cents
    * Bond prices little changed across the yield curve

    By Fergal Smith
    TORONTO, May 2 (Reuters) - The Canadian dollar weakened on
Tuesday to a fresh 14-month low against its U.S. counterpart as
stop loss orders were triggered, extending recent pressure on
the currency amid a more uncertain trade outlook and lower oil
prices.  
    "This is simply a move to try and wipe out stops ahead of
the day really getting rolling," said Brad Schruder, director of
corporate sales and structuring at BMO Capital Markets.
    "This is a lay up trade right now to sell Canada almost
across the board."
    The pullback in oil prices below $50 a barrel, domestic
mortgage market concerns and an uncertain outlook for the North
American Free Trade agreement have weighed on the loonie
recently, while the market is also bracing for a Federal Reserve
interest rate decision on Wednesday.
    The U.S. Federal Reserve is expected to hold interest rates
steady at its meeting this week as it pauses to parse more
economic data but may hint it is on track for an increase in
June.             
    In contrast, the Bank of Canada has signaled it is in no
hurry to raise interest rates.
    U.S. crude        prices were down 0.10 percent at $48.79 a
barrel despite news of lower production by Russia and
Organization of the Petroleum Exporting Countries.             
    Oil is one of Canada's major exports.
    At 9:20 a.m. ET (1320 GMT), the Canadian dollar          was
trading at C$1.3709 to the greenback, or 72.94 U.S. cents, 
weaker than Monday's close of C$1.3681, or 73.09 U.S. cents,
according to Reuters data.
    The currency's strongest level of the session was C$1.3651,
while it touched its weakest since February 2016 at C$1.3712.
    Strong commodity prices mean the value of Canadian goods
exports will jump 6 percent in 2017 after a drop last year,
Canada's export credit agency said, playing down possible
disruption to NAFTA.             
    Canadian government bond prices were little changed across
the yield curve. The two-year            edged up 1 Canadian
cent to yield 0.715 percent, while the 10-year             also
rose 1 Canadian cent to yield 1.576 percent.
    The spread between the 2-year yield and the 10-year yields
widened by 0.4 of a basis point to 86.1 basis points, its widest
since March 31.
    Canada's trade report for March is due on Thursday, and the
April employment report is due on Friday.    

 (Reporting by Fergal Smith)
  
 
 

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