February 7, 2019 / 9:05 PM / 10 months ago

CANADA FX DEBT-C$ hits two-week low as oil drops on global growth fears

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.6 percent against the greenback
    * Price of U.S. oil declines 2.5 percent
    * Canadian bond prices rise across the yield curve
    * 2-year yield hits its a five-week low

    By Fergal Smith
    TORONTO, Feb 7 (Reuters) - The Canadian dollar weakened on
Thursday to its lowest level against the greenback in nearly two
weeks, on fears of a global slowdown and ahead of domestic jobs
data on Friday that could guide Bank of Canada interest rate
expectations.
    U.S. stocks and the price of oil sank on fears that the
United States and China would not be able to reach a trade deal
with less than a month left in their fragile truce, adding to
worries about a slowdown in global growth.
                        
    U.S. crude oil futures        settled 2.5 percent lower at
$52.64 a barrel.
    "Energy commodities are getting hit pretty hard across the
board," said Colin Cieszynski, chief market strategist at SIA
Wealth Management. "As a petrocurrency, the Canadian dollar
often sees weakness from that."
    Canada is a major producer of commodities, including oil, so
its economy could be hurt by a global economic slowdown.
    At 3:29 p.m. (2029 GMT), the Canadian dollar          was
trading 0.6 percent lower at 1.3298 to the greenback, or 75.20
U.S. cents. The currency touched its weakest level intraday
since Jan. 25 at 1.3317.
    Canada's employment report for January is due on Friday. On
Wednesday, Ivey Purchasing Managers Index data for January
showed a decline in its measure of employment.             
    The Bank of Canada said in January that low oil prices,
which have led to production cuts in Alberta, and a weak housing
market harmed the economy in the fourth quarter of 2018 and
would continue to do so in the first quarter of this year.
            
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries, with the two-year
           up 10 Canadian cents to yield 1.76 percent and the
10-year             rising 46 Canadian cents to yield 1.87
percent.
    The two-year yield touched its lowest intraday since Jan. 3
at 1.758 percent.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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