August 27, 2018 / 1:57 PM / in 3 months

CANADA FX DEBT-C$ dips after Poloz inflation remarks; NAFTA deal prospects eyed

    * Canadian dollar at C$1.3035, or 76.72 U.S. cents
    * BoC's Poloz plays down recent jump in inflation
    * U.S. and Mexico close in on NAFTA trade pact deal
    * Bond prices edge lower across a steeper yield curve

    TORONTO, Aug 27 (Reuters) - The Canadian dollar dipped
against its U.S. counterpart on Monday after Bank of Canada
Governor Stephen Poloz played down the recent jump in inflation,
while signs emerged that the United States and Mexico were
nearing a NAFTA trade deal.
    The rise in inflation to a nearly seven year high of 3
percent in July was due to transitory factors, Poloz said in an
interview on Friday in Jackson Hole, Wyoming, where he was
attending an economic symposium.             
    In notes for a panel discussion at the symposium on
Saturday, Poloz said that taking a gradual, data-dependent
approach to monetary policy can help manage risk to the
inflation outlook in the face of economic uncertainties such as
digital disruptions.             
    Mexican and U.S. officials are close to a deal to resolving
their bilateral issues in the renegotiation of the North
American Free Trade Agreement (NAFTA) but a major issue must
still be settled, a top Mexican official said on Monday.
            
    Canada is also part of NAFTA, so its economy could benefit
if resolution of issues between Mexico and the United States can
bring a trilateral deal.
    At 9:19 a.m. (1319 GMT), the Canadian dollar          
traded 0.1 percent lower at C$1.3035 to the greenback, or 76.72
U.S. cents. The currency, which rose 0.3 percent last week,
traded in a range of C$1.3008 to C$1.3067.
    The price of oil, one of Canada's major exports, was little
changed amid concerns the U.S.-China trade war will erode global
economic growth, and ahead of a conference call later Monday of
members of an OPEC and non-OPEC ministerial monitoring committee
to discuss progress on their production curbs agreement.
            
    U.S. crude        prices were up 0.1 percent at $68.77 a
barrel.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           dipped 1 Canadian cent to yield 2.126 percent and the
10-year             declined 8 Canadian cents to yield 2.269
percent.
    Canada's gross domestic product data for the second quarter
is due on Thursday.

 (Reporting by Fergal Smith; Editing by Jeffrey Benkoe)
  
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