April 4, 2018 / 1:35 PM / 8 months ago

CANADA FX DEBT-C$ pulls back from 5-week high on rising trade tensions

    * Canadian dollar at C$1.2843, or 77.86 U.S. cents
    * Oil price falls 1.6 percent
    * Bond prices higher across the yield curve

    TORONTO, April 4 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Wednesday, pulling back from an
earlier five-week high, as Sino-U.S. trade tensions rose and oil
prices fell.
     China hit back quickly against the Trump administration's
plans to slap tariffs on $50 billion in Chinese goods,
retaliating with a list of similar duties on U.S. exports to
China, including soybeans, planes, cars, beef and chemicals.
            
    Canada's commodity-linked economy could be hurt if global
trade slows.
    The price of oil, one of Canada's major exports, fell to 
its lowest in two weeks on increased prospects of a trade war.
U.S. crude oil futures        were down 1.6 percent at $62.50 a
barrel.                 
    At 9:10 a.m. EDT (1310 GMT), the Canadian dollar         
was trading 0.3 percent lower at 1.2843 to the greenback, or
77.86 U.S. cents.
    The currency's weakest level of the session was C$1.2845,
while it touched its strongest since Feb. 28 at C$1.2775.
    The loonie got a boost on Tuesday from growing investor
optimism on a deal to revamp the North American Free Trade
Agreement.
    The United States, Canada and Mexico could soon announce a
deal in principle to update NAFTA that would likely tackle the
key issue of autos content while leaving other contentious
chapters to be dealt with later, three sources familiar with the
matter said on Tuesday.             
    Canadian government bond prices were higher across the yield
 curve in sympathy with U.S. Treasuries, as renewed pressure on
U.S. stocks offset data showing U.S. private-sector employment
rose by a robust 241,000 jobs in March.             
    The two-year            rose 2 Canadian cents to yield 1.787
percent and the 10-year             climbed 23 Canadian cents to
yield 2.119 percent.    
    Toronto homes sales tumbled 39.5 percent in March from the
previous year, as tighter mortgage rules and higher borrowing
costs dampened demand, data showed on Wednesday.                
    Canadian trade data for February is due on Thursday and the
March employment report is due on Friday.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  
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