May 17, 2019 / 5:38 PM / 7 months ago

CANADA FX DEBT-C$ recovers from three-week low on reports of metals tariffs deal

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    * Canadian dollar rises 0.1% against the greenback
    * Loonie hits weakest level since April 25 at 1.3514
    * For the week, the Canadian dollar declines 0.3%
    * Canadian bond prices dip across a flatter yield curve

    By Fergal Smith
    TORONTO, May 17 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Friday, recovering from an
earlier three-week low after reports that a deal was reached to
remove tariffs on its metals that had been imposed by the United
States.
    U.S. officials have agreed to remove tariffs on steel and
aluminum imported from Canada and Mexico in 48 hours, paving the
way for the three North American counties to enact a new trade
pact, the Washington Post and Politico reported.             
    "At least we have more certainty in the North American
region," said Michael Goshko, corporate risk manager at Western
Union Business Solutions. "A country as trade dependent as
Canada needs all the good news it can get at the moment."
    Canada sends about 75% of its exports to the United States,
including oil.
     Oil prices dipped but were on track for a weekly gain on
rising concerns over potential further supply disruptions in
Middle East shipments due to U.S.-Iran political tensions. U.S.
crude        prices were down 0.2% at $62.77 a barrel.
            
    At 1:02 p.m. (1702 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3457 to the greenback, or 74.31 U.S.
cents.
    Earlier in the session the loonie touched its weakest level
since April 25 at 1.3514 as investors became more worried about
the trade war between the United States and China.             
    Canada runs a current account deficit so its economy could
be hurt by a slowdown in the global flow of capital or trade.
    For the week, the loonie was down 0.3%.
    Canadian government bond prices were lower across a flatter
yield curve, with the two-year            down 4 Canadian cents
to yield 1.608% and the 10-year             declining 10
Canadian cents to yield 1.689%.
    The gap between the 2- and 10-year yields narrowed by 1.1
basis points to a spread of 8.1 basis points in favor of the
longer-dated bond.
    Canada's interest rate markets are due to close early ahead
of the Victoria Day holiday on Monday.      

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Phil Berlowitz)
  
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