February 10, 2020 / 9:30 PM / 4 months ago

CANADA FX DEBT-C$ slips to 4-month low as virus worries offset housing gains

    * Canadian dollar hits weakest level since Oct. 10 at 1.3330
    * Price of U.S. oil decreases 1.4%
    * Canadian housing starts rise 8.8% in January
    * Canadian bond yields fall across the yield curve

    By Fergal Smith
    TORONTO, Feb 10 (Reuters) - The commodity-linked Canadian
dollar weakened to a four-month low against its U.S. counterpart
on Monday as worries that the coronavirus outbreak would slow
the domestic economy overshadowed stronger-than-expected housing
data.
    The spreading coronavirus outbreak will hit the Canadian
economy, in particular the tourism sector, supply chains and the
struggling oil industry, Finance Minister Bill Morneau said.
            
    The price of oil, one of Canada's major exports, fell on
weaker Chinese demand in the wake of the coronavirus outbreak
and as traders waited to see if Russia would join other
producers in seeking further output cuts. U.S. crude oil futures
       were down 1.4% at $49.60 a barrel.
    At 4:11 p.m. (2111 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3315 to the greenback, or 75.10 U.S.
cents. The currency, which fell 0.5% last week, touched its
weakest intraday level since Oct. 10 at 1.3330.       
    Canadian housing starts rose by 8.8% in January compared
with the previous month to 213,224 units as groundbreaking
increased on multiple unit urban homes, data from the Canadian
Mortgage and Housing Corporation showed on Monday. Economists
had expected starts to rise to 205,000.             
    "January's positive print is consistent with our forecast
calling for residential investment to support overall growth in
the first quarter," Rishi Sondhi, an economist at TD Bank Group,
said in a research note.
    Separate data, from Statistics Canada, showed that the value
of Canadian building permits rose by 7.4% in December from
November.             
    It follows data on Friday showing that Canada added 34,500
jobs in January, more than twice the number markets were
expecting, which prompted investors to reduce bets that the Bank
of Canada would cut interest rates as soon as next month.
            
    Bank of Canada Governor Stephen Poloz, who is due to step
down in June, will speak on Thursday in Melbourne, Australia.   
        
    Canadian government bond yields were lower across the yield
curve in sympathy with U.S. Treasuries. The 10-year yield
            fell 2.1 basis points to 1.309%.

 (Reporting by Fergal Smith
Editing by Marguerita Choy)
  
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