June 26, 2020 / 7:24 PM / 8 days ago

CANADA FX DEBT-C$ hits a 4-week low as business curbs cloud U.S. economic reopening

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.2% against the greenback
    * Loonie declines 0.4% for the week
    * Price of U.S. oil slips 0.6%
    * Canadian bond yields fall across a flatter curve

    By Fergal Smith
    TORONTO, June 26 (Reuters) - The Canadian dollar weakened to
a near four-week low against its U.S. counterpart on Friday as
investors worried that a rise in American coronavirus infections
could slow the reopening of the U.S. economy.
    Many U.S. states that were spared the brunt of the initial
outbreak or moved early to lift movement restrictions are seeing
a resurgence in new infections, with Texas and Florida ordering
bars to close down again on Friday.             
    "That (news) triggered a large risk-off move around the
London close," said Erik Bregar, head of FX Strategy at the
Exchange Bank of Canada.
    The market was working on the assumption that there would be
pockets of new cases but that the United States was "still in
the reopening phase," Bregar said.
    Canada sends about 75% of its exports to the United States,
including oil. U.S. crude oil futures        settled 0.6% lower
at $38.49 a barrel, while Wall Street's major indexes tumbled.
                        
    The Canadian dollar        was trading 0.2% lower at 1.3664
to the greenback, or 73.19 U.S. cents. The currency hit its
weakest intraday level since June 1 at 1.3715.
    A resurgence of bets on the Federal Reserve cutting interest
rates below zero helped the loonie claw back some of its
decline, said Bregar.
    "It seems right now the bond market wants to force the Fed's
hand again," Bregar said.       
    For the week, the loonie was down 0.4%. Its decline this
week came as investors worried that Washington could reimpose
tariffs on Canadian aluminum and after Canada lost one of its
coveted triple-A ratings when Fitch downgraded it for the first
time.                         
    Canadian government bond yields eased across a flatter curve
in sympathy with U.S. Treasuries. The 10-year             fell
nearly 3 basis points to its lowest level since June 15 at about
0.500%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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