March 19, 2018 / 8:48 PM / in 5 months

CANADA FX DEBT-C$ recovers from near 9-month low as greenback dips

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar at C$1.3062, or 76.56 U.S. cents
    * Loonie touches its weakest since June 28 at C$1.3124
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, March 19 (Reuters) - The Canadian dollar firmed
against its U.S. counterpart on Monday, rebounding from an
earlier near nine-month low, as broader losses for the greenback
offset dwindling expectations for Bank of Canada interest rate
hikes.
    At 4 p.m. ET (2000 GMT), the Canadian dollar          was
trading 0.3 percent higher at C$1.3062 to the greenback, or
76.56 U.S. cents.
    The currency's strongest level of the session was C$1.3046,
while it touched its weakest since June 28 at C$1.3124.
    "It really feels like a little bit of a pause here (in the
loonie's decline) ahead of the FOMC," said Brad Schruder,
director of corporate sales and structuring at BMO Capital
Markets. "I'm not sure the market is buying expectations for
rate hikes from the Bank of Canada for 2018."
    The Canadian dollar fell more than 2 percent last week as
comments from Bank of Canada Governor Stephen Poloz reinforced
expectations the central bank can take its time raising rates
after hiking three times since last July.             
    Chances of a rate hike by May have slipped to less than 60
percent from around 75 percent earlier this month, data from the
overnight index swaps market shows.           
    In contrast, financial markets look for the Fed to increase
rates on Wednesday for the first time this year.
    The U.S. dollar        fell against a basket of major
currencies after four straight weeks of gains as a Reuters
report, that European Central Bank officials were shifting their
debate from bond purchases to the expected path of interest
rates, boosted the euro.             
    U.S. President Donald Trump appears to be "enthusiastic"
about coming to an agreement on renegotiating the North American
Free Trade Agreement (NAFTA), Canada's Prime Minister Justin
Trudeau said.
    Canada sends about 75 percent of its exports to the United
States. Its economy could be hurt if NAFTA is scrapped.        
    The price of oil, one of Canada's major exports, slipped as
Wall Street slid and energy market investors remained wary of
growing crude supply.               
    U.S. crude oil futures        settled 0.5 percent lower at
$62.06 a barrel.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 3.5 Canadian cents to
yield 1.783 percent and the 10-year             falling 24
Canadian cents to yield 2.166 percent.
    Bank of Canada Senior Deputy Governor Carolyn Wilkins will
deliver a speech on Thursday, while domestic inflation data for
February is due on Friday.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Marguerita Choy)
  
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