December 12, 2018 / 8:50 PM / 2 years ago

CANADA FX DEBT-C$ climbs as investors dump greenback for riskier assets

 (Adds strategist quotes, details throughout; updates prices)
    * Canadian dollar rises 0.3 percent against the greenback
    * Price of U.S. oil falls nearly 1 percent
    * Canada's industry capacity use fell to 82.6 percent in Q3
    * Canadian bond prices trade lower across steeper yield

    By Fergal Smith
    TORONTO, Dec 12 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Wednesday as the greenback
broadly declined, and as stocks got a boost from optimism over
trade negotiations between the United States and China.
    The U.S. dollar        declined against a basket of major
currencies as expectations that British Prime Minister Theresa
May would survive a no-confidence vote on her leadership helped
boost the pound.             
    "What we are seeing is the Canadian dollar strengthening in
an environment of broad-based U.S. dollar weakness," said Eric
Theoret, a currency strategist at Scotiabank. "In an environment
of risk appetite you typically do tend to see the U.S. dollar
weaken as people get out of the (safe) havens and into riskier
    U.S. stocks jumped about 1.6 percent on Wednesday, bolstered
by the technology sector, as signs Beijing would ease its "Made
in China 2025" industrial policy added to optimism fueled by
President Donald Trump's upbeat comments on trade talks.
    News on Tuesday that a top executive of Chinese telecoms
giant Huawei Technologies Co Ltd was granted bail by a Canadian
court, 10 days after her arrest in Vancouver at the request of
U.S. authorities, helped bolster market sentiment, Theoret said.
    Canada exports many commodities, including oil, and runs a
current account deficit, so its economy stands to benefit if the
outlook improves for the global flow of trade and capital.
    The price of oil turned lower after getting an earlier boost
from an industry report that showed a drop in U.S. crude
inventories. U.S. crude oil futures        settled nearly 1
percent down at $51.15 a barrel.             
    At 3:34 p.m. (2034 GMT), the Canadian dollar          was
trading 0.3 percent higher at 1.3349 to the greenback, or 74.91
U.S. cents.
    Last Thursday, the loonie touched its weakest level in
nearly 18 months at 1.3445 to the U.S. dollar after Bank of
Canada Governor Stephen Poloz said the economy was less strong 
than forecast.              
    Canadian industry ran at 82.6 percent of capacity in the
third quarter, below a downwardly revised 84.1 percent in the
second quarter, Statistics Canada said on Wednesday.
    Separately, the Teranet-National Bank Composite House Price
Index showed that Canadian home prices fell 0.3 percent in
November from October, the second straight month of decline.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The 10-year
            declined 29 Canadian cents to yield 2.115 percent.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky and
Jonathan Oatis)
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