May 2, 2019 / 8:35 PM / 22 days ago

CANADA FX DEBT-C$ weakens as oil prices slide nearly 3 percent

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.2% against the greenback
    * Price of U.S. oil decreases 2.8%
    * Canadian bond prices decline across steeper yield curve

    By Fergal Smith
    TORONTO, May 2 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Thursday as oil prices fell to a
one-month low and expectations declined for an interest rate cut
this year from the Federal Reserve.
     The price of oil, one of Canada's major exports, was
pressured by oversupply fears after U.S. crude oil inventories
rose sharply. U.S. crude oil futures        settled 2.8% lower
at $61.81 a barrel.               
    "We've seen oil prices take a bit of a hammering ... that
has pulled the Canadian dollar down a bit," said Shaun Osborne,
chief currency strategist at Scotiabank.
    Higher U.S. rates after the Federal Reserve rate decision on
Wednesday have helped support the U.S. dollar, Osborne added.   
    The U.S. dollar        gained against most currencies as
traders pared their bets of an interest rate cut from the Fed
after Fed Chairman Jerome Powell said a decline in inflation
this year could be due to transitory factors.             
    At 3:55 p.m. (1955 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3470 to the greenback, or 74.24 U.S.
cents.
    The currency, which on Wednesday touched its strongest
intraday level in more than one week at 1.3378, traded in a
narrow range of 1.3430 to 1.3476 ahead of U.S. jobs data on
Friday.
    China's suspension of two Canadian pork exporters' permits
was due to a labeling problem, Canada's agriculture minister
said, adding that she was hopeful of it being resolved.
            
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 9.5 Canadian
cents to yield 1.622% and the 10-year             falling 59
Canadian cents to yield 1.765%.
    The 10-year yield touched its highest intraday since April
23 at 1.774%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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