May 1, 2020 / 9:05 PM / 3 months ago

CANADA FX DEBT-C$ slides as trade threats weigh on commodity-linked currencies

    * Canadian dollar falls 0.9% against the greenback
    * Canada names Tiff Macklem as its next central bank
    * Canadian manufacturing PMI falls to a record low
    * For the week, the loonie gains 0.2%

 (Adds strategist quotes and details throughout; updates prices)
    By Fergal Smith
    TORONTO, May 1 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as domestic data showed a
plunge in factory activity to a record low and the United States
threatened China with new tariffs, with the loonie giving back
much of this week's rally.
    U.S. President Donald Trump said his administration was
crafting retaliatory measures against China as punishment for
the coronavirus outbreak, once again sparking tariff fears that
rattled markets through much of the last two years.             
    Canada runs a current account deficit and is a major
exporter of commodities, including oil, so the domestic economy
tends to be dependent on the global flow of trade and capital.
    The loonie was "broadly lower" along with other
commodity-linked currencies, said Greg Anderson, global head of
foreign exchange strategy at BMO Capital Markets in New York.
"It broke resistance at 1.4050 and took off."
    The currencies of Australia       , New Zealand        and
Norway       , countries that also depend on commodity exports,
also lost ground.
    At 3:38 p.m. (1938 GMT), the Canadian dollar          was
trading 0.9% lower at 1.4064 to the greenback, or 71.10 U.S.
cents. The currency, which traded in a range of 1.3936 to
1.4110, was up 0.2% for the week.
    Canada named Tiff Macklem, a former senior deputy at the
Bank of Canada, as its next central bank governor. He brings
familiarity to the job that could prove helpful as the Canadian
economy is pounded by the coronavirus pandemic and low oil
    In a news conference, Macklem said that in the current
situation he sees the present level of interest rates, at 0.25%,
as the "effective lower bound," matching the position of current
Bank of Canada Governor Stephen Poloz.
    The IHS Markit Canada Manufacturing PMI fell to a seasonally
adjusted 33.0 in April from 46.1 in March, as the coronavirus
outbreak prompted some factories to halt production and new
orders crumbled, data showed.             
    Speculators have increased their bearish bets on the
Canadian dollar, data from the U.S. Commodity Futures Trading
Commission showed. As of April 27, net short positions had
increased to 29,044 contracts from 23,891 in the prior week.    
    U.S. crude oil futures        ended 5% higher at $19.78 a
barrel as OPEC and its allies began a record output cut to
tackle a supply glut weighing on the market.                 
    Canadian bond yields were mixed across a flatter yield
curve, with the 10-year down 2.2 basis points at 0.526%.

 (Reporting by Fergal Smith
Editing by Chizu Nomiyama and Jonathan Oatis)
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