February 6, 2019 / 3:08 PM / a year ago

CANADA FX DEBT-C$ hits one-week low as Australian dollar slumps

    * Canadian dollar falls 0.4 percent against the greenback
    * Loonie touches one-week low at 1.3207 U.S. dollars
    * Price of U.S. oil declines 0.7 percent
    * Canadian bond prices rise across the yield curve

    TORONTO, Feb 6 (Reuters) - The Canadian dollar weakened to
its lowest in one week against the greenback on Wednesday,
pressured by a sharp sell-off in the Australian dollar and as
the Bank of Canada warned that U.S. trade uncertainty is hurting
the economy.
    The Australian dollar was on track for its biggest single
day drop against the greenback in a year after the Reserve Bank
of Australia signaled a possible interest rate cut in a stunning
shift from its long-standing tightening bias.             
    Australia and Canada are major produces of commodities, so
their currencies often move in the same direction.
    The price of oil, one of Canada's main products, fell after
a report showed a rise in U.S. crude inventories, contrary to
expectations the market will tighten in 2019 as a result of
OPEC-led supply cuts and U.S. sanctions on Venezuela. U.S. crude
       prices were down 0.7 percent at $53.29 a barrel.
    Uncertainty over U.S. trade policies is holding back
Canadian business investment despite strong economic
fundamentals, Bank of Canada Deputy Governor Timothy Lane said.
    At 9:43 a.m. (1443 GMT), the Canadian dollar          was
trading 0.4 percent lower at 1.3175 to the greenback, or 75.90
U.S. cents. The currency touched its weakest intraday level
since last Wednesday at 1.3207.
    Still, the Canadian dollar will extend this year's rally
over the coming 12 months, according to a Reuters poll of
currency strategists who expect the U.S. dollar to broadly fall
and for global monetary policy to stay looser than previously
    After dropping 7.8 percent last year, the loonie has rallied
3.6 percent since the start of 2019, which makes it the
top-performing G10 currency.
    The value of Canadian building permits increased by 6.0
percent in December from November, Statistics Canada said on
Wednesday, surprising analysts who had expected a decrease of
1.0 percent.             
    Canada's employment report for January is due on Friday.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 3 Canadian cents to yield 1.811 percent and the 10-year
            climbed 17 Canadian cents to yield 1.919 percent.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
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