January 28, 2019 / 2:22 PM / 9 months ago

CANADA FX DEBT-C$ reverses from 2-week high as oil prices slide

    * Canadian dollar falls 0.3 percent against the greenback
    * Price of U.S. oil falls nearly 2 percent
    * Bond prices trade mixed across the yield curve
    * Canada-U.S. 2-year spread touches its widest since Dec. 20

    TORONTO, Jan 28 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday, pulling back from its
highest in more than two weeks as oil prices fell and investors
grew more worried about China's economy.
    World stocks were pressured by a second straight monthly
fall in profits for China's industrial firms.             
    Officials from China are due to visit Washington this week
for the next round of trade negotiations with the United States.
The trade dispute between the world's two largest economies
could worsen the outlook for global growth.               
    Canada is running a current account deficit and exports many
commodities, including oil, so its economy could be hurt by a
slowdown in the global flow of trade or capital.
    The price of oil fell after U.S. companies added rigs for
the first time this year, a signal that crude output may rise
further. U.S. crude oil futures        were down nearly 2
percent at $52.63 a barrel.              
    Still, oil has rebounded about 24 percent since hitting an
18-month low in December.
    At 8:58 a.m. (1358 GMT), the Canadian dollar          was
trading 0.3 percent lower at 1.3257 to the greenback, or 75.43
U.S. cents. The currency's weakest level of the session was
1.3264, while it touched its strongest since Jan. 11 at 1.3204.
    The 17-day high for the loonie came despite weak domestic
data last week that prompted some economists to project that
Canada's economy contracted in November. November gross domestic
product data is due on Thursday.    
    Canadian government bond prices were mixed across the yield
curve, with the two-year            up 0.5 Canadian cent to
yield 1.882 percent and the 10-year             falling 1
Canadian cent to yield 1.979 percent.
    The gap between Canada's 2-year yield and its U.S.
equivalent widened by 1.4 basis points to a spread of 72.9 basis
points in favor of the U.S. bond, its widest since Dec. 20.   

 (Reporting by Fergal Smith
Editing by Frances Kerry)
  
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