November 29, 2018 / 3:14 PM / 2 years ago

CANADA FX DEBT-C$ firms as oil prices rally, current account deficit narrows

    * Canadian dollar rises 0.1 percent against the greenback
    * Price of U.S. oil rises 1.8 percent
    * Canada's Q3 current account deficit narrows to C$10.34
    * Canadian bond prices rise across a flatter yield curve

    By Fergal Smith
    TORONTO, Nov 29 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Thursday, building on gains from
the day before as oil prices rallied and data showed that Canada
ran a smaller-than-expected current account deficit in the third
    The country's current account deficit narrowed to C$10.34
billion in the third quarter from a revised C$16.68 billion
deficit in the second quarter, Statistics Canada said. Analysts
had forecast a deficit of C$11.50 billion.             
    The improvement reflected better prices for Canada's exports
that have since "melted away," said Avery Shenfeld, chief
economist at CIBC Capital Markets.
    The price of oil, one of Canada's major exports, has slumped
more than 30 percent since October.
    But U.S. crude        prices were 1.8 percent higher on
Thursday at $51.20 a barrel, after industry sources said Russia
had accepted the need to cut production, together with the
Organization of the Petroleum Exporting Countries.             
    At 9:58 a.m. (1458 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3265 to the greenback, or 75.39
U.S. cents. The currency traded in a range of 1.3254 to 1.3314.
    On Wednesday, the loonie hit a five-month low intraday at
1.3360 before rallying on comments from Federal Reserve Chairman
Jerome Powell that were seen as dovish by some investors.
    Market players have also been weighing prospects for
U.S.-China trade talks at the G20 Summit.             
    U.S. Trade Representative Robert Lighthizer said on
Wednesday that he was examining all available tools to raise
U.S. tariffs on Chinese vehicles to the 40 percent duties that
China is now charging on U.S.-produced vehicles.             
    In addition to being a major commodities exporter, Canada
runs a current account deficit, so its economy could be hurt if
the global flow of trade or capital slows.
    Canada's gross domestic product data for the third quarter
is due on Friday.
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries, with the 10-year
            climbing 18 Canadian cents to yield 2.306 percent.
    The 10-year yield touched its lowest intraday since Sept. 10
at 2.289 percent.         

 (Reporting by Fergal Smith
Editing by Susan Thomas)
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