October 1, 2019 / 8:24 PM / in 20 days

CANADA FX DEBT-Canadian dollar rebounds from one-week low as greenback falters

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    * Canadian dollar strengthens 0.2% against greenback
    * Canada's GDP unchanged in July
    * Loonie touches lowest level since Sept. 23 at 1.3290
    * Canadian bond prices rise across steeper yield curve

    By Fergal Smith
    TORONTO, Oct 1 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday, recovering from an
earlier one-week low after evidence the U.S.-China trade war was
hurting U.S. manufacturing activity.
    At 3:46 p.m. (1946 GMT), the Canadian dollar          was
trading 0.2% higher at 1.3218 to the greenback, or 75.65 U.S.
cents.
    Earlier in the session, the loonie hit its weakest intraday
level since Sept. 23 at 1.3290, after data showed that the
domestic economy had stalled in July.
    Canada's economy was unchanged in July, following four
straight months of growth, as the country's mining, quarrying
and oil and gas extraction sectors contracted, Statistics Canada
data showed. Analysts had forecast an increase of 0.1%.
            
    "The minor disappointment in July GDP moved the currency ...
but the big mover was the 10 o'clock manufacturing ISM number
out of the U.S.," said Michael Goshko, corporate risk manager at
Western Union Business Solutions.
     The U.S. dollar        declined against a basket of major
currencies after data showed the U.S. manufacturing sector
contracted in September to its weakest level in more than a
decade as business conditions worsened amid U.S.-China trade
tensions.             
    In contrast, Canadian manufacturing activity expanded in
September at the fastest pace in seven months as new orders and
production picked up, according to the IHS Markit Canada
Manufacturing Purchasing Managers' index.             
    "Our manufacturing number for September was a beat ... that
would have added to the positive tone in Canada," Goshko said.
    The Bank of Canada has worried that the U.S.-China trade
conflict is weighing more heavily on the global economy, but has
showed no appetite for cutting rates amid steady domestic
activity.             .           
    The price of oil, one of Canada's major exports, fell as
weak U.S. economic data dimmed crude's demand outlook. U.S.
crude oil futures        settled 0.8% lower at %53.62 a barrel.
            
    Canadian government bond prices were higher across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 8.5 Canadian cents to yield 1.533% and the
10-year             was up 6 Canadian cents to yield 1.355%.

 (Reporting by Fergal Smith
Editing by Paul Simao and Tom Brown)
  
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