December 14, 2018 / 3:41 PM / 10 months ago

CANADA FX DEBT-C$ weakens on global growth worries; Ontario downgraded

    * Canadian dollar falls 0.2 percent against the greenback
    * Loonie is on track to fall 0.4 percent for the week
    * Canadian bond prices rise across the yield curve
    * Ontario-Quebec 10-year spread hits widest since June

    TORONTO, Dec 14 (Reuters) - The Canadian dollar lost ground
against its broadly stronger U.S. counterpart on Friday as
investors worried about signs of slower global growth and after
the debt rating of Canada's most populous province was
downgraded by Moody's.
    At 10:24 a.m. (1524 GMT), the Canadian dollar          was
trading 0.2 percent lower at 1.3378 to the greenback, or 74.75
U.S. cents.
    The currency traded in a range of 1.3346 to 1.3402. It was
on track to fall 0.4 percent for the week.    
    Stocks and the price of oil, one of Canada's major exports,
fell as weak economic data from China and Europe exacerbated
global growth fears and added to unease over the trade dispute
between the United States and China.                         
    U.S. crude        prices were down 1.8 percent at $51.66 a
barrel.
    In contrast, solid U.S. store sales in November supported
the notion the world's largest economy is expanding at a steady
clip, boosting the greenback        against a basket of major
currencies.             
    Credit rating agency Moody's downgraded the issuer and
long-term debt rating of Ontario, Canada's industrial heartland,
to Aa3 from Aa2 due to the fiscal challenges facing the province
over the medium-term.             
    Last month, the province's new Conservative government said
it will run a budget deficit of C$14.5 billion in 2018-19, its
widest in seven years.             
    Ontario has one of the largest sub-sovereign debts in the
world. The additional yield it pays to borrow over 10 years
compared to Quebec widened by 0.5 basis points to 5.5 basis
points, the widest spread since June 7.
    In Canadian data, the ratio of household debt-to-income
widened to 173.8 percent in the third quarter, to hold near a
record high, from an upwardly revised 173.2 percent in the
second quarter, data from Statistics Canada showed.             
    Canadian government bond prices were higher across the yield
curve, with the 10-year             rising 37 Canadian cents to
yield 2.115 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 3.1 basis points to a spread of 78.4 basis
points in favor of the U.S. bond.

 (Reporting by Fergal Smith
Editing by Bill Trott)
  
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