January 21, 2019 / 9:07 PM / 10 months ago

CANADA FX DEBT-C$ dips on doubts about U.S.-China trade talks progress

 (Adds investor quote and details on activity; updates prices)
    * Canadian dollar weakens 0.2 percent against the greenback
    * Canadian bond prices rise across a flatter yield curve
    * Price of U.S. oil rises 0.2 percent

    By Fergal Smith
    TORONTO, Jan 21 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as investors worried
about progress on trade talks between the United States and
China and after the International Monetary Fund cut its world
economic growth forecasts.    
    The IMF predicted the global economy would grow 3.5 percent
in 2019 and 3.6 percent in 2020, due to weakness in Europe and
some emerging markets, and it said failure to resolve trade
tensions could further destabilize a slowing global economy.
            
    The United States and China have made little progress in
trade talks on the potential sticking point of China's alleged
intellectual property theft, according to Bloomberg.
    Hopes that the world's two largest economies are moving
closer to a trade deal have helped boost stocks since the start
of the year.
    "Today was the first time we have seen a headline in 2019
that maybe the negotiations are a little further apart than what
markets had been previously anticipating," said Scott Smith,
managing partner at Viewpoint Investment Partners.
    China's economic growth cooled slightly in the fourth
quarter from a year earlier as expected, weighed down by weak
investment and faltering consumer confidence as Washington piled
on trade pressure, leaving 2018 growth the weakest in 28 years.
            
    Canada exports many commodities, including oil, so its
economy could be hurt by a slowdown in the global economy.
    U.S. crude oil futures        rose 0.2 percent but the rally
in global equities stalled. U.S. markets were closed for Martin
Luther King Jr. Day.                         
    At 3:46 p.m. (2046 GMT), the Canadian dollar          was
trading 0.2 percent lower at 1.3294 to the greenback, or 75.22
U.S. cents, which matched the decline for the New Zealand dollar
       as the biggest among G10 currencies.
    The loonie, which hit a nine-day low on Thursday at 1.3319,
traded in a range of 1.3257 to 1.3318.
    The decline for the loonie comes after data on Friday showed
a pick-up in December in Canada's annual inflation rate but
stable underlying price pressures that could forestall
additional interest rate hikes from the Bank of Canada over the
coming months.             
    Canadian manufacturing and wholesale trade data for November
are due on Tuesday. The November retail sales report is due on
Wednesday.
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 14 Canadian
cents to yield 2.020 percent. On Friday, the 10-year yield
touched its highest intraday in one month at 2.049 percent.

 (Reporting by Fergal SmithEditing by Nick Zieminski and Cynthia
Osterman)
  
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