June 20, 2018 / 8:41 PM / 4 months ago

CANADA FX DEBT-C$ falls for fifth straight day as NAFTA uncertainty lingers

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.3315, or 75.10 U.S. cents
    * Loonie touches its weakest since June 22, 2017 at C$1.3321
    * Price of U.S. oil rises 1.8 percent
    * Canada-U.S. 2-year spread touches widest since March 2007

    By Fergal Smith
    TORONTO, June 20 (Reuters) - The Canadian dollar weakened
for a fifth straight day against its U.S. counterpart on
Wednesday to hit a near one-year low as comments by Canada's
foreign minister revealed no breakthrough in talks to revamp the
NAFTA trade pact.
    Canadian Foreign Minister Chrystia Freeland reiterated
Canada's opposition to the U.S. push for a sunset clause that
would allow any member to quit the North American Free Trade
treaty after five years.             
    "The narrative hasn't changed at all and because of that
lack of change I think it's easy to push for a weaker Canadian
dollar at this time," said Amo Sahota, director at Klarity FX in
San Francisco.
    Canada sends about 75 percent of its exports to the United
States, so its economy could suffer if NAFTA is scrapped.
    Investors are betting that Bank of Canada interest rate
hikes will peak before they reach the central bank's estimate of
neutral, as rising trade tensions and high domestic debt loads
threaten to slow the growth of the country's economy.
            
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.2 percent lower at C$1.3315 to the greenback, or 75.10
U.S. cents. The currency touched its weakest since June 22,
2017, at C$1.3321.    
    The price of oil, one of Canada's major exports, was
supported by a drop in domestic inventories. U.S. crude oil
futures        rose 1.3 percent to $66.22 a barrel.            
    Canadian government bond prices were mixed across the yield
curve, with the two-year            flat to yield 1.846 percent
and the 10-year             falling 18 Canadian cents to yield
2.182 percent.
    The 2-year yield fell 2.1 basis points further through its
U.S. equivalent to a spread of -72.0 basis points, its widest
since March 2007.
    Canadian inflation data for May and the April retail sales
report are due out on Friday.

 (Reporting by Fergal Smith
Editing by Bill Trott and James Dalgleish)
  
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