May 21, 2019 / 8:35 PM / 5 months ago

CANADA FX DEBT-C$ posts 11-day high as Canada exits crosshairs of global trade war

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar rises 0.2% against the greenback
    * Loonie touches its strongest since May 10 at 1.3396
    * Price of U.S. oil eases 0.2%
    * Canada's 10-year yield rises to near three-week high at
1.764%

    By Fergal Smith
    TORONTO, May 21 (Reuters) - The Canadian dollar strengthened
to an 11-day high against the greenback on Tuesday as investors
calculated that the threat of trade uncertainty would ease for
Canada even as they ramped up on countries with close economic
links to China.
    Signs that Asia is already feeling the pinch from a trade
conflict between the United States and China pushed the U.S.
dollar        to a four-week high against a basket of major
currencies.             
    Investors have worried that U.S. restrictions on Chinese
telecoms equipment maker Huawei Technologies Co Ltd         
would lead to an escalation in the trade tensions between
Washington and Beijing.
    Meanwhile, the United States has agreed to lift tariffs on
steel and aluminum from Canada and Mexico. Canadian Foreign
Minister Chrystia Freeland has since said that Canada will move
quickly to ratify the new North American trade pact, called the
United States-Mexico-Canada Agreement, or USMCA.               
    "The Canadian dollar just gets a pass," said Mark McCormick,
North American head of FX strategy at TD Securities. "What's
clear is that (U.S. President Donald) Trump seems to only have
the ability to fight one trade war at a time and that speeds up
the process of trying to get USMCA ratification complete."
    Canada sends about 75% of its exports to the United States,
including oil. 
    Oil futures were steady on Monday as the prospect of
mounting U.S.-Iran tensions disrupting supply was offset by
concerns that a lengthy trade war between Washington and Beijing
would limit crude demand. U.S. crude oil futures        settled
0.2% lower at $62.99 a barrel.      
    At 3:58 p.m. EDT (1958 GMT), the Canadian dollar         
was trading 0.2% higher at 1.3404 per greenback, or 74.60 U.S.
cents, the second best performance among Group of 10 currencies
after the Norwegian crown       .
    The loonie touched its strongest level since May 10 at
1.3396.        
    Canada's housing market will stay stuck in the doldrums,
with average prices stagnating this year and then rising 1.7%
next year, hardly keeping pace with inflation, a Reuters poll of
economists and property market experts showed.             
    Canadian government bond prices were lower across the yield
curve as the market reopened following the country's Victoria
Day holiday on Monday.
    The two-year            fell 13 Canadian cents to yield
1.676% and the 10-year             declined 64 Canadian cents to
yield 1.757%. The 10-year yield posted its highest intraday
level since May 3 at 1.764%.

 (Reporting by Fergal Smith, editing by G Crosse)
  
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