June 11, 2019 / 2:10 PM / 5 months ago

CANADA FX DEBT-Loonie edges higher as investor risk appetite picks up

    * Canadian dollar rises 0.1% against the greenback
    * Price of U.S. oil increases 0.5%
    * Canada's 10-year yield touches an 11-day high at 1.543%.

    TORONTO, June 11 (Reuters) - The Canadian dollar
strengthened slightly against its U.S. counterpart on Tuesday,
holding near its highest in more than three months, as global
stocks and oil prices climbed.        
    Global stocks          rose as signs of more fiscal stimulus
from China and some easing of last week's tensions around
Central American immigrants and Mexico buoyed investors'
appetite for risk.             
    Investors have worried that U.S. tariffs imposed on Mexican
goods in connection with the immigrants could undermine chances
of a new North American trade deal coming into force.
    Canada sends about 75 percent of its exports to the United
States, including oil. It also runs a current account deficit,
so its economy could benefit from a pick-up in the global flow
of trade or capital.
    The price of oil        rose as firmer equities and
expectations that OPEC and its allies will keep withholding
supply countered concern about slowing economies and demand.
U.S. crude oil futures        were up 0.5% at $53.52 a barrel.
            
    At 9:44 a.m. (1344 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3261 to the greenback, or 75.41 U.S.
cents. The currency, which touched on Monday its strongest
intraday level since March 1 at 1.3226, traded in a range of
1.3251 to 1.3275.
    The loonie has benefited this month from expectations that
the Bank of Canada will cut interest rates less than the Federal
Reserve.
    Money markets see a less-than 50 percent chance of a Bank of
Canada interest rate cut by December, while they are pricing in
at least two cuts over the same period by the Fed. <BOCWATCH
>                  
    Canadian government bond prices were lower across a flatter
yield curve, with the two-year            down 4.5 Canadian
cents to yield 1.485% and the 10-year             falling 15
Canadian cents to yield 1.538%.
    The 10-year yield touched its highest intraday since May 31
at 1.543%.

 (Reporting by Fergal Smith; Eiting by Steve Orlofsky)
  
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