February 11, 2020 / 2:57 PM / 10 days ago

CANADA FX DEBT-Canadian dollar strengthens as easing virus worries boost oil prices

    * Canadian dollar rises 0.2% against the greenback
    * Price of U.S. oil increases 1.7%
    * Canadian bond yields rise across the yield curve

    TORONTO, Feb 11 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday as hopes rose that the
coronavirus epidemic may be close to peaking, boosting the price
of oil, one of Canada's major exports.
    U.S. crude oil futures        were up 1.7% at $50.41 a
barrel as the number of new coronavirus cases slowed in China,
easing some concerns about lengthy destruction of oil demand.
            
    Still, oil has fallen more than 20% from its January peak,
which could hurt prospects for new investment in Canada's energy
sector. The federal government must rule by the end of February
whether Teck Resources Ltd            can build a massive oil
sands mine in northern Alberta.             
    At 9:38 a.m. (1438 GMT), the Canadian dollar          was
trading 0.2% higher at 1.3296 to the greenback, or 75.21 U.S.
cents. The currency, which on Monday hit its weakest intraday
level in four months at 1.3330, traded in a range of 1.3289 to
1.3320.
    Bank of Canada Governor Stephen Poloz is due to participate
in a panel discussion on Thursday in Melbourne, Australia, which
could offer clues on the outlook for interest rates.
    Last month, the central bank opened the door to an interest
rate cut should a recent slowdown in domestic growth persist.
But data since then has showed that the economy added more than
twice the number of jobs than expected in January.
                         
    Canadian government bond yields rose across the yield curve
in sympathy with U.S. Treasuries as Federal Reserve Chair Jerome
Powell was fairly upbeat about the outlook for the U.S. economy
in the first of his twice-a-year updates to Congress.
            
    The 10-year yield             was up 0.9 basis point at
1.322%, while the gap between it and the U.S. 10-year yield
widened by 2.7 basis points to a spread of 26.1 basis points in
favor of the U.S. bond.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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