July 4, 2019 / 2:24 PM / 4 months ago

CANADA FX DEBT-C$ clings to 8-month high as investors bet on Fed rate cut

    * Loonie touches an eight-month high at 1.3055 per U.S.
dollar
    * Price of U.S. oil falls 0.7%
    * Canada's 2-year yield touches a five-week high at 1.509%

    TORONTO, July 4 (Reuters) - The Canadian dollar strengthened
very slightly to an eight-month high against its U.S.
counterpart on Thursday as investors bet that the U.S. Federal
Reserve would cut interest rates this month.
    The expectation that the Fed and other major central banks
would embrace looser monetary policy kept government bond yields
near multi-year lows and pushed world stocks to new 18-month
highs.             
    Meanwhile, recent Canadian data, including a report on
Wednesday showing a surprise swing in the trade balance to
surplus, has dampened expectations that the Bank of Canada would
cut interest rates this year.                               
    The central bank will next week make an interest rate
decision and revise its growth forecasts for the economy.       
 
    At 9:55 a.m. (1355 GMT), the Canadian dollar          was
trading less than 0.1% higher at 1.3055 to the greenback, its
strongest level since Nov. 2, last year. Its weakest was 1.3079.
    The narrow range for the currency came as markets were
closed in the United States for the Independence Day holiday.
    The loonie notched an eight-month high even as the price of
oil, one of Canada's major exports, was weighed down by data
showing a smaller-than-expected draw on U.S. crude stockpiles
along with worries about the global economy. U.S. crude oil
futures        were down 0.7% at $56.94 a barrel.               
    Canadian government bond prices were lower across the yield
curve. The two-year            fell 2 Canadian cents to yield
1.509%, its highest yield since May 29, while the 10-year
            was down 10 Canadian cents to yield 1.466%.
    Canada's jobs report for June is due on Friday.   

 (Reporting by Fergal Smith; 
Editing by Sandra Maler)
  
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