April 23, 2019 / 8:05 PM / a month ago

CANADA FX DEBT-C$ hits 4-week low as investors see end to BoC's hiking bias

 (Adds strategist quotes and details throughout; updates prices)
    * Loonie falls 0.7% against the U.S. dollar
    * Canadian wholesale rises by 0.3 percent in February 
    * Price of U.S. oil increases 1.1%
    * Canada-U.S. 2-year spread posts a one-month wide

    By Fergal Smith
    TORONTO, April 23 (Reuters) - The Canadian dollar weakened
to a nearly four-week low against its U.S. counterpart on
Tuesday as the greenback climbed broadly and investors bet that
the Bank of Canada would forgo language pointing to further
interest rate hikes.
    Canada's central bank is expected to hold its benchmark
interest rate steady at 1.75% on Wednesday and for the rest of
this year, with calls for the next hike in early 2020 resting on
a knife's edge, a Reuters poll showed.             
    "Any hiking bias will probably be removed completely from
the statement," said Ranko Berich, head of market analysis at
Monex Canada and Monex Europe. "The impetus for a rate hike has
been removed by slowing economic data."
    The Canadian economy has taken a hit from the province of
Alberta's mandatory production cut of oil - its biggest export -
a slowdown in the housing market and wilting business sentiment
over worries surrounding the U.S.-China trade war.
    Canadian wholesale trade increased by 0.3 percent in
February from January, Statistics Canada said on Tuesday. But
trade was down 1.5% after excluding the motor vehicle and motor
vehicle parts and accessories subsector.                 
    The U.S. dollar        rose against a basket of major
currencies as traders favored the greenback ahead of the release
on Friday of U.S. gross domestic product data for the first
three months of 2019.             
    At 3:23 p.m. (1923 GMT), the Canadian dollar          was
trading 0.7% lower at 1.3436 to the greenback, or 74.43 U.S.
cents, its biggest decline in nearly seven weeks. The currency
touched its weakest level since March 29 at 1.3443.
    The decline for the loonie came despite a nearly six-month
high for the price of oil as sources said Gulf OPEC members were
ready to raise output only if there was demand before offsetting
any shortfall following a U.S. decision to end waivers for
buyers of Iranian crude.             
    U.S. crude oil futures        settled 1.1% higher at $66.30
a barrel.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 8.5 Canadian cents to yield 1.576% and the 10-year
            was up 27 Canadian cents to yield 1.758%.
    Canada's two-year yield fell 1.9 basis points further below
the yield on the equivalent U.S. bond to a spread of -78.8 basis
points, its widest since March 22.

 (Reporting by Fergal Smith; Editing by Susan Thomas and Peter
Cooney)
  
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