February 21, 2019 / 9:33 PM / 9 months ago

CANADA FX DEBT-C$ weakens with oil, as Poloz signals no rush to hike

 (Adds strategist quotes and details throughout; updates prices)
    * Loonie falls 0.3 percent against the greenback
    * Canadian wholesale trade rises 0.3 percent in December
    * Price of U.S. oil falls 0.4 percent
    * Canadian bond prices decline across the yield curve

    By Fergal Smith
    TORONTO, Feb 21 (Reuters) - The Canadian dollar weakened
against the greenback on Thursday, as lower oil prices offset
stronger-than-expected domestic data and Bank of Canada Governor
Stephen Poloz continued to signal a more gradual pace of future
interest rate hikes.
    At 4:04 p.m. (2104 GMT), the Canadian dollar          was
trading 0.3 percent lower, at 1.3222 to the greenback, or 75.63
U.S. cents. The currency, which notched a two-week high on
Wednesday, at 1.3151, traded in a range of 1.3163 to 1.3232.
    Poloz indicated he was in no rush to resume monetary
tightening, saying that while interest rates needed to move up
into a neutral range of between 2.5 percent and 3.5 percent over
time, the path back was now "highly uncertain."             
    The Bank of Canada has raised interest rates by 125 basis
points since July 2017. Chances of another hike by the end of
the year were unchanged from Wednesday at less than 20 percent,
data from the overnight index swaps market indicated.           
    Poloz's comments "didn't add anything knew," said Greg
Anderson, global head of foreign exchange strategy at BMO
Capital Markets in New York. "The event risk of this is out of
the picture now and oil prices are softer. The end result is
buying of USD-CAD."
    The price of oil, one of Canada's major exports, sank below
recent 2019 highs as U.S. government data showed a sharp build
in crude stocks and record production, while concerns about
slowing global economic growth weighed on the market.
            
    U.S. crude oil futures        settled 0.4 percent lower at
$56.96 a barrel, while Wall Street lost ground after data
showing that new orders for key U.S.-made capital goods
unexpectedly fell in December.                  
    In contrast, Canadian wholesale trade beat analysts'
forecasts for a 0.1 percent decline. Wholesale trade increased
by 0.3 percent in December from November on stronger sales in
the motor vehicle and parts subsector, Statistics Canada said.
    A separate report, from ADP, showed that Canada added 35,400
jobs in January as hiring increased in the trade, transportation
and utilities and professional and business services sectors.
            
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 4.5 Canadian cents to yield 1.795 percent and the 10-year
            declined 19 Canadian cents to yield 1.917 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and
Leslie Adler)
  
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