November 5, 2018 / 9:04 PM / 2 years ago

CANADA FX DEBT-C$ near flat as investors brace for U.S. election

 (Updates prices to flat)
    * Canadian dollar trades near flat against the greenback
    * Price of U.S. oil dips 0.1 percent
    * Canadian bond prices trade higher across a flatter yield

    By Fergal Smith
    TORONTO, Nov 5 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Monday, lagging most
other G10 currencies as the greenback broadly declined ahead of
U.S. midterm elections and a Federal Reserve meeting this week.
    The U.S. dollar        dipped after three consecutive weeks
of gains as investors took profits before Tuesday's elections,
which may fuel volatility in global markets. The Fed interest
rate decision is due on Thursday.             
    "This is very much a U.S. dollar move," said Mark Chandler,
head of Canadian fixed income and currency strategy at RBC
Capital Markets. "Where we have seen the U.S. dollar weaken, the
second weakest tends to be Canada in that time frame."
    Canada's economy is closely tied to the United States, where
it sends about 75 percent of its exports.
    Both countries are at similar points of the economic cycle,
with stronger growth than some other counties and central banks
that are raising interest rates, Chandler said.
    Canada's economy will continue to grow faster than its
potential over the coming quarters as U.S. fiscal stimulus
boosts demand for its exports, setting the stage for more Bank
of Canada interest rate hikes, a Reuters poll of economists
showed last month.             
    Bank of Canada Governor Stephen Poloz told a business
audience in London that market volatility, a stronger U.S.
dollar and higher yields for long-term bonds are signs that
markets are becoming more normal, rather than an indication of
    Money markets expect the central bank to raise interest
rates again in January. The Bank of Canada hiked interest rates
last month to a level of 1.75 percent. It was the fifth hike
since July 2017.
    At 3:35 p.m. (2035 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3106 to the greenback, or 76.30
U.S. cents. The currency traded in a narrow range between 1.3072
to 1.3116.
    Among other G10 currencies, sterling did best, rising 0.5
percent on hopes of a Brexit deal breakthrough.
    The price of oil, one of Canada's major exports, steadied
after a steep five-day fall, as the United States formally
imposed punitive sanctions on Iran but granted eight countries
temporary waivers allowing them to keep buying oil from the
Islamic Republic.             
    U.S. crude oil futures        settled 0.1 percent lower at
$63.10 a barrel.     
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 13 Canadian
cents to yield 2.518 percent.   

 (Reporting by Fergal Smith; Editing by David Gregorio and Lisa
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