September 27, 2018 / 9:05 PM / 22 days ago

CANADA FX DEBT-C$ lags greenback, beats other G10 currencies ahead of Poloz

 (Adds strategist's quotes, details throughout; updates prices)
    * Canadian dollar falls 0.2 percent vs greenback
    * Loonie touches C$1.3083, its weakest level since Sept. 11
    * Price of U.S. oil rises 0.8 percent 
    * Canadian bond prices trade mixed across yield curve

    By Fergal Smith
    TORONTO, Sept 27 (Reuters) - The Canadian dollar fell to a
two-week low versus the greenback on Thursday, but ahead of a
speech by Bank of Canada Governor Stephen Poloz, fared better
than other G10 currencies as worries eased that a NAFTA trade
deal would not be reached.
    Criticism on Wednesday by U.S. President Donald Trump that
talks to modernize the North American Free Trade Agreement were
moving too slowly had helped send the loonie to its weakest
intraday level since Sept. 11 at $1.3083.
    But Canada shrugged off the complaint and made clear it had
to keep negotiating as long as there was a chance of success.
             
    "You have had the market do a bit of a rethink because I
think the path forward on a bilateral U.S.-Mexico deal is still
pretty challenging," said Eric Theoret, a currency strategist at
Scotiabank.
    Trump has already concluded a text with Mexico, the third
country in NAFTA, and is threatening to leave out Canada unless
it signs up by Sunday.
    Canada sends about 75 percent of its exports to the United
States, so its economy could be hurt if a deal is not reached or
if Trump follows through on a threat to impose tariffs on
Canadian autos.
    At 4:01 p.m. (2001 GMT), the Canadian dollar          was
trading 0.2 percent lower at C$1.3047 to the greenback, or 76.65
U.S. cents, the smallest decline against the U.S. dollar among
G10 currencies.
    "I still think there is a reasonable probability of a deal
this weekend," said Greg Anderson, global head of foreign
exchange strategy at BMO Capital Markets. "It always gets the
most intense right at the end on any type of negotiation because
people actually have to move red lines."    
    The U.S. dollar        climbed against a basket of 
currencies one day after the U.S. Federal Reserve raised
interest rates for the third time this year.             
    The Bank of Canada has also been hiking rates this year.
Poloz on Thursday could provide clues on prospects of another
hike in October. The central bank will release his prepared
remarks at 5:45 p.m. (2145 GMT).
    The price of oil, one of Canada's major exports, was
supported by the prospect of a shortfall in global supply once
U.S. sanctions against major crude exporter Iran come into
force.             
    U.S. crude oil futures        settled 0.8 percent higher at
$72.12 a barrel.      
    Canadian government bond prices were mixed across the yield
curve, with the 10-year             rising 1 Canadian cent to
yield 2.415 percent.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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