September 16, 2019 / 8:20 PM / 2 months ago

CANADA FX DEBT-Canadian dollar rises after attack on Saudi oil facilities

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar rises 0.4% against the greenback
    * Price of U.S. oil rallies 14.7%
    * Canadian homes sales rise 1.4% in August
    * Canadian bond prices gain across a flatter yield curve

    By Fergal Smith
    TORONTO, Sept 16 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday, before
giving back some of its early gains, as oil prices soared
following a weekend attack on Saudi Arabian oil facilities.
    U.S. crude oil futures        settled 14.7% higher at $62.90
a barrel, the largest one-day percentage gain since December
2008, after an attack on sites run by state-owned Saudi Aramco
halved the kingdom's oil production. Oil is one of Canada's
major exports.             
    "I would say the reaction of the loonie has been in line
with the rest of FX, whereby we saw some strengthening in the
oil currencies, but it has been pretty tame," said Alvise
Marino, a foreign exchange strategist at Credit Suisse in New
York.
    "Markets are in a wait and see mode to see what the response
to this Aramco attack is." Marino added.
    U.S. President Donald Trump said it looked like Iran was
responsible for attack over the weekend, but he was in no rush
to respond and was still trying to find out who was behind it.
                
    At 3:32 p.m. (1932 GMT), the Canadian dollar          was
trading 0.4% higher at 1.3240 to the greenback, or 75.53 U.S.
cents. The Russian ruble       , another oil-linked currency,
rose about 0.6%, while the Norwegian krone        was up about
0.4%.
    The loonie, which on Friday hit its weakest intraday level
since Sept. 4 at 1.3291, traded in a range of 1.3208 to 1.3271.
    The spike in crude prices came as investors awaited the
outcome of the Federal Reserve's next policy meeting on
Wednesday. The Fed is widely expected to ease interest rates and
signal its future policy path.                   
    Meanwhile, Canadian homes sales rose 1.4% in August from
July, the sixth consecutive month of increased activity,
according to the Canadian Real Estate Association.             
    Separate data, from Statistics Canada, showed that foreign
investors reduced their holdings of Canadian securities by C$1.2
billion in July, while Canadian investment in foreign securities
increased by C$12.5 billion.
    Canada's inflation report for August is due on Wednesday,
which could help guide expectations for the Bank of Canada's
interest rate outlook.               
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The 10-year
            rose 34 Canadian cents to yield 1.475%.
    On Friday, the 10-year yield touched its highest since July
19 at 1.521%.

 (Reporting by Fergal Smith
Editing by Chris Reese and Tom Brown)
  
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