April 17, 2020 / 8:21 PM / 4 months ago

CANADA FX DEBT-Canadian dollar pares weekly loss as Ottawa helps energy sector

    * Canadian dollar rises 0.3% against the greenback
    * The loonie trades 1% lower for the week
    * Canadian bond yields rise across the curve
    * For the week, the 10-year yield falls more than 14 basis
points

    By Fergal Smith
    TORONTO, April 17 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Friday, with the
currency clawing back some of this week's decline as risk
appetite rose and the federal government offered C$2.5 billion
in support for the hard-hit oil and gas industry.
    World stock markets          rose after U.S. President
Donald Trump laid out plans to gradually reopen the
coronavirus-hit American economy following similar moves
elsewhere.             
    Canada sends about 75% of its exports to the United States.
    The loonie followed "other major currencies stronger against
the U.S. dollar in a risk-on move," said Michael Goshko,
corporate risk manager at Western Union Business Solutions.
    "Sentiment was also no doubt helped by the announcement of
further support from Ottawa for small and medium-sized
businesses," Goshko said.
    Prime Minister Justin Trudeau said Ottawa was working with
the Business Development Bank of Canada and Export Development
Canada to expand credit support for at-risk medium-sized energy
firms.             
    At 3:43 p.m. (1943 GMT), the Canadian dollar          was
trading 0.3% higher at 1.4035 to the greenback, or 71.25 U.S.
cents. The currency, which on Thursday hit its weakest intraday
level since April 6 at 1.4180, traded in a range of 1.4005 to
1.4118.
    For the week, the loonie was down 1%.
    Speculators have trimmed their bearish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
showed. As of April 14, net short positions had fallen to 23,760
contracts from 24,433 in the prior week.    
    Once the coronavirus outbreak is over it could take the
Canadian economy a couple of years to make up the lost ground
caused by business and industry shutdowns, Bank of Canada
Governor Stephen Poloz said on Thursday.             
    The Bank of Canada has slashed interest rates by 150 basis
points since March and begun buying Canadian government bonds.
On Wednesday, the central bank said it would broaden its
asset-purchase, or quantitative easing, program to include
provincial and corporate debt.              
    Canada's economy could be hit particularly hard because it
is a major producer of oil, which has collapsed since January.
    Oil prices were mixed on Friday, with weak Chinese economic
figures and rapidly filling U.S. crude storage offsetting
outlines for the U.S. economy to emerge from the shutdown.
            
    Canadian government bond yields rose across the curve, with
the 10-year             up 2.1 basis points at 0.636%. Still,
the 10-year yield was down more than 14 basis points for the
week.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and
Alistair Bell)
  
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