March 6, 2018 / 9:58 PM / in 5 months

CANADA FX DEBT-C$ breaks six-session losing streak ahead of BoC decision

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar at C$1.2886, or 77.60 U.S. cents
    * Loonie gains for first time since Feb. 23
    * Bond prices lower across yield curve
    * Bank of Canada interest rate decision due on Wednesday

    By Fergal Smith
    TORONTO, March 6 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Tuesday, breaking a
string of six straight losing trading days, as investors turned
their attention to a Bank of Canada interest rate decision on
Wednesday while fears on trade lingered.
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading 0.6 percent stronger at C$1.2886 to the greenback, or
77.60 U.S. cents, its first advance since Feb. 23.
    The loonie traded in a range of C$1.2865 to C$1.2995. On
Monday, it touched its weakest since July 5 at C$1.3002.        
    "A lot depends on how the Bank of Canada characterizes their
view on the outlook tomorrow," said Eric Theoret, a currency
strategist at Scotiabank. "Ultimately, nothing fundamentally has
changed, with the exception of these potential threats."
    U.S. President Donald Trump has appeared to tie possible
exemptions for Canada and Mexico from proposed tariffs on steel
and aluminum to a "new" North American Free Trade Agreement as
well as other steps.    
    The Bank of Canada has said that uncertainty about the
future of NAFTA is weighing increasingly on the outlook for
Canada's economy.
    The central bank has raised interest rates three times since
July but is expected to leave its benchmark interest rate on
hold at 1.25 percent on Wednesday.
    The U.S. dollar index        fell to a one-week low as
traders piled back into riskier currencies after an agreement
between North and South Korea to hold direct talks.             
    The price of oil       , one of Canada's major exports,
edged higher and global stocks rose as Republican U.S. lawmakers
stepped up calls for Trump to pull back from the proposed metals
tariffs.                  
    The pace of purchasing activity in Canada picked up in
February, according to Ivey Purchasing Managers Index data.
            
    Domestic trade data for January is due on Wednesday and the
February employment report is due on Friday.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 5 Canadian cents to
yield 1.776 percent and the 10-year             falling 30
Canadian cents to yield 2.232 percent.
    On Monday, the 10-year yield touched its lowest intraday in
nearly two months 2.145 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
  
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