January 2, 2020 / 8:29 PM / in 5 months

CANADA FX DEBT-C$ clings to 2019 gains as Chinese stimulus boosts Wall Street

 (Adds analyst quote and details throughout; updates prices)
    * Canadian dollar was nearly unchanged against the greenback
    * Canadian factory activity expands at slower pace in
December
    * Price of U.S. oil increases by 0.2%
    * Canadian bond prices rally across a flatter yield curve

    By Fergal Smith
    TORONTO, Jan 2 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Thursday as Chinese
stimulus buoyed investor sentiment, with the loonie holding on
to its gains from 2019, when it was the top-performing G10
currency.
    U.S. stocks extended their rally into the new year as
monetary policy easing from Beijing to prop up its economy added
to optimism fueled by easing trade tensions and an improving
global outlook.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from an improved outlook for the
global economy.
    "Positive developments on the trade front, along with firmer
oil prices as 2020 kicks off, should place USD-CAD in a
sell-the-rally stage for the time being," Ronald Simpson,
managing director, global currency analysis at Action Economics,
said in a note.
    U.S. crude oil futures        settled 0.2% higher at $61.18
a barrel, supported by signs of improving Washington-Beijing
trade relations and rising tensions in the Middle East.
            
    At 2:55 p.m. (1955 GMT), the Canadian dollar          was
trading nearly unchanged at 1.2986 to the greenback, or 77.01
U.S. cents.
    The currency, which traded in a range of 1.2969 to 1.3008
was little changed despite the U.S. dollar        gaining ground
against a basket of major currencies and data showing that
Canadian manufacturing activity expanded in December at its
slowest pace in four months.             
    The IHS Markit Canada Manufacturing Purchasing Managers'
index (PMI) fell to a seasonally adjusted 50.4 in December, its
lowest level since August, from 51.4 in November.
    On Tuesday, the loonie notched a 14-month high at 1.2952.
The currency strengthened 5% in 2019.
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 5.5 Canadian cents
to yield 1.67% and the 10-year             rising 58 Canadian
cents to yield 1.638%.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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