March 8, 2018 / 9:42 PM / in 5 months

CANADA FX DEBT-Loonie firms as Canada gets metals tariffs exemption

    * Canadian dollar at C$1.2898, or 77.53 U.S. cents
    * Bond prices mixed across the yield curve
    * 10-year yield touched highest intraday since Feb. 28

    By Fergal Smith
    TORONTO, March 8 (Reuters) - The Canadian dollar edged
higher against the greenback on Thursday as Canada was exempted
from U.S. metals tariffs and investors looked ahead to domestic
jobs data due on Friday.
    U.S. President Donald Trump pressed ahead with the
imposition of 25 percent tariffs on steel imports and 10 percent
on aluminum but exempted Canada and Mexico, backtracking from
earlier pledges of tariffs on all countries.             
    Canada is the largest supplier of both metals to the United
States.
    The gesture to Canada and Mexico was aimed at putting
pressure on those countries to give ground in separate talks on
the North American Free Trade Agreement, which appear to be
stalled.
    "What they (the Trump administration) want and what Canada
can readily give, there may still be some light between those
two points," said Shaun Osborne, chief currency strategist at
Scotiabank. "So I wouldn't say the risk has been lifted
entirely, but it's much better than it looked for Canada,
certainly late last week."
    U.S. plans for steel and aluminum tariffs and rising
protectionist rhetoric "carry potentially serious consequences"
and will dampen business investment, but it is too early to know
how monetary policy should react, Bank of Canada Deputy Governor
Tim Lane said.             
    On Wednesday, the Bank of Canada left its benchmark interest
rate unchanged at 1.25 percent.             
    The central bank has raised interest rates three times since
July and Canada's employment report for February can help guide
expectations for further hikes. Economists in a Reuters poll
expect jobs to rebound by 20,000 after slumping 88,000 in
January.
    Data from Statistics Canada on Thursday showed that the
value of Canadian building permits jumped 5.6 percent in January
from December, while new home prices were flat for a second
month in a row.                         
    At 4 p.m. (2100 GMT), the Canadian dollar          was
trading 0.1 percent higher at C$1.2898 to the greenback, or
77.53 U.S. cents.
    The currency traded in a range of C$1.2868 to C$1.2961. On
Wednesday, the loonie matched Monday's low at C$1.3002, its
weakest since July 5.
    The price of oil, one of Canada's major exports, headed for
a second straight weekly drop. U.S. crude oil futures       
settled 1.7 percent lower at $60.12 a barrel.                 
    Canadian government bond prices were mixed across the yield
curve, with the 10-year             rising 8 Canadian cents to
yield 2.227 percent. The yield touched its highest intraday
since Feb. 28 at 2.246 percent.

 (Reporting by Fergal Smith; Editing by David Gregorio and Peter
Cooney)
  
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