December 14, 2018 / 10:06 PM / 2 years ago

CANADA FX DEBT-C$ weakens as markets fret about global growth outlook

 (Adds strategist quotes and details on activity, updates
    * Canadian dollar falls 0.2 percent against the greenback
    * Loonie falls 0.4 percent for the week
    * Canadian bond prices rise across the yield curve
    * Canada-U.S. 10-year spread widens by 4.2 basis points

    By Fergal Smith
    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 braced
for a potential interest rate hike next week from the Federal
    At 4:12 p.m. (2112 GMT), the Canadian dollar          was
trading 0.2 percent lower at 1.3382 to the greenback, or 74.73
U.S. cents.
    The currency traded in a range of 1.3346 to 1.3402. It was
down 0.4 percent for the week.
    "It has been a risk-off day for sure and that ties into the
weaker-than-expected Chinese data that we had overnight," said
Bipan Rai, North America head of FX strategy at CIBC Capital
    Weak data from China and Europe stoked fears of a global
economic slowdown, pressuring stocks and the price of oil, one
of Canada's major exports.                         
    U.S. crude oil futures        settled 2.6 percent
lower$51.20 a barrel, while the U.S. dollar        climbed to a
19-month high against a basket of currencies.              
    Solid U.S. retail sales in November helped boost the
greenback, ahead of an interest rate decision next week by the
Fed. Money markets see a greater-than 70 percent chance of a
rate hike.           
    The Fed decision will help determine the direction of the
Canadian dollar next week but the currency will also take its
cue from domestic inflation and gross domestic product data, Rai
    Canadian inflation data for November is due next Wednesday
and the October GDP report is due next Friday.
    On Friday, data from Statistics Canada showed that 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.             
    Speculators have cut their bearish bets on the Canadian
dollar for the first time in five weeks, data from the U.S.
Commodity Futures Trading Commission and Reuters calculations
showed. As of Dec. 11, net short positions had dipped to 11,669
contracts from 12,936 a week earlier.
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 8.5 Canadian cents to
yield 2.021 percent and the 10-year             rising 49
Canadian cents to yield 2.101 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 4.2 basis points to a spread of 79.4 basis
points in favor of the U.S. bond.

 (Reporting by Fergal Smith
Editing by Bill Trott and Diane Craft)
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