May 3, 2019 / 2:31 PM / 21 days ago

CANADA FX DEBT-C$ rebounds from one-week low on muted U.S. wage inflation

    * Canadian dollar rises 0.3% against the greenback
    * Loonie touches its weakest intraday since April 26 at
1.3492
    * Price of U.S. oil rises 0.1%
    * Canada-U.S. 2-year spread narrows by 2.6 basis points

    TORONTO, May 3 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Friday, recovering from an
earlier one-week low as the U.S. jobs report pointed to solid
economic growth but tame inflation that could keep the Federal
Reserve from raising interest rates.
     U.S. Treasury yields fell after the jobs data as investors
focused on wage inflation that was muted even as nonfarm
payrolls increased by 263,000 jobs last month.             
    Stocks on Wall Street rose, but the Canadian dollar's usual
tight link to the performance of U.S. equities has waned as
investors pay more attention to domestic economic headwinds than
signs of improved prospects for the U.S. economy.               
 
    At 9:51 a.m. (1351 GMT), the Canadian dollar          was
trading 0.3% higher at 1.3434 to the greenback, or 74.44 U.S.
cents. The currency's strongest level of the session was 1.3431,
while it touched its weakest since April 26 at 1.3492.
    For the week, the loonie was on track to rise 0.2%.       
    The Canadian dollar is set to strengthen over the coming
year, helped by higher oil prices, but the currency's gains will
be held back by the greater interest rate offered to holders of
U.S. dollars, a Reuters poll showed.             
    The price of oil, one of Canada's major exports, rose but
was on track for sharp weekly declines as surging U.S. output
countered production losses in sanctions-hit Iran and Venezuela.
U.S. crude        prices were up 0.1% on Friday at $61.84 a
barrel.             
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 0.5 Canadian cent
to yield 1.624% and the 10-year             rising 5.5 Canadian
cents to yield 1.756%.
    The gap between Canada's 2-year yield and its U.S.
equivalent narrowed by 2.6 basis points to a spread of 69.9
basis points in favor of the U.S. bond.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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