August 2, 2018 / 1:36 PM / 5 months ago

CANADA FX DEBT-C$ edges lower as trade tensions weigh on risk assets

    * Canadian dollar at C$1.3021, or 76.80 U.S. cents
    * Price of U.S. oil falls 0.4 percent
    * Bond prices lower across much of the yield curve

    TORONTO, Aug 2 (Reuters) - The Canadian dollar edged lower
against its broadly stronger U.S. counterpart on Thursday as oil
and stock prices fell following a flare-up in the trade tensions
between the United States and China.
    Stocks fell globally, while the U.S. dollar        rose
against a basket of major currencies and the Chinese yuan after
U.S. administration officials said on Wednesday that President
Donald Trump was proposing a 25 percent tariff on $200 billion
worth of Chinese imports.                         
    Canada has its own trade feud with the United States and
runs a current account deficit, and its economy could be hurt if
the flow of trade or capital slows.
    The price of oil, one of Canada's major exports, was 
pressured by trade tensions and a surprise increase in U.S.
crude inventories. U.S. crude        prices were down 0.4
percent at $67.36 a barrel.             
    At 9:05 a.m. EDT (1305 GMT), the Canadian dollar         
was trading 0.1 percent lower at C$1.3021 to the greenback, or
76.80 U.S. cents. The currency traded in a narrow range of
C$1.2996 to C$1.3039.
    On Wednesday, the loonie touched its strongest in nearly
seven weeks at C$1.2975. It was boosted by recent domestic data
that has added to bets for another interest rate hike this year
from the Bank of Canada and signs of progress in talks to update
a trade pact between Canada, the United States and Mexico.
          
    The United States and Mexico are getting close to a deal on
the key issue of autos content rules at negotiations to renew
the North American Free Trade Agreement, Mexican and Canadian
officials said on Wednesday.             
    Canada sends about 75 percent of its exports to the United
States. Its trade data for June is due on Friday.
    Canadian government bond prices were higher across much of
the yield curve in sympathy with U.S. Treasuries. The 10-year
            rose 5 Canadian cents to yield 2.364 percent.
    On Wednesday, the 10-year yield touched its highest in more
than two months at 2.378 percent.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  
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