November 13, 2018 / 9:07 PM / 2 years ago

CANADA FX DEBT-C$ steadies after hitting 4-month low on oil price slump

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar near flat against the greenback
    * Loonie touches its weakest since July 20 at 1.3264
    * Price of U.S. oil slumps 7.1 percent
    * Canadian bond prices rise across a flatter yield curve

    By Fergal Smith
    TORONTO, Nov 13 (Reuters) - The Canadian dollar was little
changed against the greenback on Tuesday, steadying after it
touched the weakest level in nearly four months earlier in the
session as a sell-off in oil accelerated.
    The price of oil, one of Canada's major exports, plunged to
lows not seen since last November due to ongoing worries about
weakening global demand, oversupply and declines across other
asset classes, including equities.             
    U.S. crude oil futures        settled 7.1 percent lower at
$55.69 a barrel.
    The slide in oil prices "is delivering a very, very hard
blow to the Canadian dollar," said Karl Schamotta, director
global markets strategy at Cambridge Global Payments. "The
correlation between WTI (West Texas Intermediate) and the
Canadian dollar has risen quite substantially."
    The one-month rolling correlation between the Canadian
dollar and oil rose to 85 percent on Tuesday, according to
Refinitiv Eikon data, indicating that the currency and the
commodity move mostly in the same direction. As recently as
August, the correlation was negative.
    At 3:35 p.m. (2035 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3249 to the greenback, or 75.48
U.S. cents. Still, the currency touched 1.3264, its weakest
intraday level since July 20.
    The U.S. dollar        declined against a basket of major
currencies as Britain and the European Union agreed on a
preliminary text for the nation to leave the economic bloc,
boosting the euro and sterling.             
    "Optimism surrounding a Brexit deal has had virtually no
impact on the Canadian dollar," Schamotta said.
    Wall Street gave up early gains as a rebound in technology
stocks and renewed hope for progress in trade talks were offset
by drops in Boeing and energy stocks.             
    Canadian government bond prices were higher across a flatter
yield curve, tracking U.S. Treasuries, following the Remembrance
Day holiday in Canada on Monday.
    The two-year            rose 6 Canadian cents to yield 2.307
percent and the 10-year             climbed 43.5 Canadian cents
to yield 2.455 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Richard Chang)
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