September 5, 2018 / 12:29 PM / 2 months ago

CANADA FX DEBT-C$ edges higher ahead of Bank of Canada rate decision

    * Canadian dollar at C$1.3171, or 75.92 U.S. cents
    * Bank of Canada interest rate decision due
    * NAFTA trade talks resume
    * Price of U.S. oil falls 1.4 percent

    TORONTO, Sept 5 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Wednesday, recovering from a
recent decline ahead of an interest rate decision by the Bank of
Canada and further talks to revamp the NAFTA trade pact.
    Canada heads into talks in Washington on the North American
Free Trade Agreement with determination not to back down on key
issues, despite threats from U.S. President Donald Trump to
retaliate against the Canadian economy unless Ottawa gives
ground quickly.             
    The Bank of Canada, which has worried that trade uncertainty
will hold back business investment, will wait at least until
October before raising interest rates again, according to a
Reuters poll taken late last week.             
    U.S. stock index futures fell as investors weighed the
possibility of Trump following through on plans to impose a
fresh round of U.S. tariffs on Chinese goods right after a
public comment period ends on Thursday.
    Canada runs a current account deficit, so its economy could
be hurt if the global flow of trade or capital slows.
    Still, the country's currency is likely to rally over the
coming months, according to foreign exchange strategists in a
separate Reuters poll, who forecast that trade uncertainty will
fade.             
    At 8:04 a.m. (1204 GMT), the Canadian dollar          was
trading 0.1 percent higher at C$1.3171 to the greenback, or
75.92 U.S. cents.
    The currency, which touched its weakest in nearly seven
weeks on Tuesday at C$1.3208, traded in a range of C$1.3165 to
C$1.3207.
    The price of oil, one of Canada's major exports, fell as a
tropical storm hitting the U.S. Gulf coast weakened and moved
away from oil-producing areas. U.S. crude        prices were
down 1.4 percent at $68.93 a barrel.      
    Canada's trade report for July is due at 8:30 a.m. (1230
GMT), while employment data for August is due on Friday.
    Canadian government bond prices edged lower across the yield
curve, with the 10-year             falling 1 Canadian cent to
yield 2.237 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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