February 4, 2019 / 9:29 PM / 9 months ago

CANADA FX DEBT-: C$ dips with oil but clings to most of 2019 gains

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar dips 0.1 percent against the greenback
    * Price of U.S. oil falls 1.3 percent
    * Canadian bond prices were little changed across the yield
curve
    * Canada-U.S. 10-year spread widens by 3.4 basis points

    By Fergal Smith
    TORONTO, Feb 4 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday as oil prices fell and
the greenback broadly climbed, but the loonie kept hold of most
of its 2019 gains after having performed better than its peers
since the start of the year.
    The price of oil, one of Canada's major exports, fell after
disappointing U.S. factory data sparked fresh concerns about a
slowdown in the global economy.             
    U.S. crude oil futures        settled 1.3 percent lower on
Monday at $54.56 a barrel. Still, oil has rallied about 29
percent since hitting its lowest point in 18 months in December.
    "I think oil is going to stay firm and the Canadian dollar
should stay firm with it," said Ronald Simpson, managing
director, global currency analysis at Action Economics.
    The U.S. dollar        strengthened across the board as
investors took heart from Friday's strong U.S. payrolls number
and improved risk appetite helped lift the greenback to a
five-week high against the safe-haven yen.             
    At 3:57 p.m. (2057 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3115 to the greenback, or 76.25
U.S. cents. The currency, which on Friday touched its strongest
intraday level in nearly three months at 1.3069, traded in a
range of 1.3086 to 1.3147.
    The loonie has climbed 4 percent since the start of the
year, making it the top-performing G10 currency. It fell 7.8
percent in 2018.
    Data last Friday from the U.S. Commodity Futures Trading
Commission, which had been delayed during a partial shutdown of
the U.S. government, and Reuters calculations showed that
speculators raised their bearish bets on the Canadian dollar in
December to the highest in about five months.
    As of Dec. 24, net short positions had jumped to 44,692
contracts from 7,457 a week earlier.             
    Canadian government bond prices were little changed across
much of the yield curve, with the 10-year             flat to
yield 1.959 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 3.4 basis points to a spread of 76.6 basis
points in favor of the U.S. bond.
    Canada's employment report for January is due on Friday,
which could help guide expectations for additional interest rate
hikes from the Bank of Canada.

 (Reporting by Fergal Smith; Editing by David Gregorio)
  
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