July 30, 2019 / 1:49 PM / a year ago

CANADA FX DEBT-Loonie falls as investors await Fed rate decision

    * Canadian dollar falls 0.1% against the greenback
    * U.S. crude oil prices increase 0.4%
    * Bond prices move lower across the yield curve

    By Levent Uslu
    TORONTO, July 30 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Tuesday, hovering around a
one-month low it hit on Friday, ahead of the widely expected
interest rate cut by the Federal Reserve this week.
    Money markets are convinced the Fed will cut the key
benchmark rate by 25 basis points, but it remains to be seen
whether this is going to be a one-off cut or whether more cuts
will follow.             
    At 9:10 a.m. (1310 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3177 to the greenback, or 75.89 U.S.
cents. The currency on Friday touched its weakest intraday level
in nearly one month at 1.3199.
    The Bank of Canada left its benchmark interest rate
unchanged at 1.75% this month but highlighted the risks that
trade wars posed to the global economy.             
    Canada's gross domestic product data for May is due on
Wednesday, with a Reuters poll forecasting a 0.1% increase,
which could help guide expectations for the direction of
interest rates.
    Meanwhile, the price of oil, one of Canada's major exports,
rose for a fourth day on Tuesday on optimism the Fed will cut
interest rates for the first time in more than 10 years,
supporting fuel consumption in the world's biggest oil user.
    U.S. crude oil futures        were up 0.4% to 57.07 a
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 1 Canadian cent to
yield 1.495% and the 10-year             falling 1 Canadian cent
to yield 1.477%.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 0.5 basis points to a spread of 58.4 basis
points in favor of the U.S. bond, the widest gap since June 19. 

 (Reporting by Levent Uslu
Editing by Nick Zieminski)
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