October 7, 2019 / 8:26 PM / 15 days ago

CANADA FX DEBT-Canadian dollar keeps to narrow range as oil rally fades

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar trades near flat against the greenback
    * Loonie trades in a range of 1.3291 to 1.3331
    * Price of U.S. oil dips 0.1% 
    * Canada's 10-year yield touches a one-month low at 1.226%

    By Fergal Smith
    TORONTO, Oct 7 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Monday, sticking to a
narrow range as oil prices fluctuated and trade talks loomed
this week between the United States and China.
    U.S. stocks dipped after a report that Beijing was
increasingly reluctant to agree to a broad trade deal pursued by
President Donald Trump weighed on sentiment.             
    "Some market participants are waiting for Thursday when
trade negotiations resume, but I think also traders are a little
bit tired of these headlines," said Erik Bregar, head of FX
strategy at the Exchange Bank of Canada.
    "It's a bit of a range trade here. I think the little bit of
volatility we saw in oil today was probably more of a factor,"
Bregar said.
    The price of oil, one of Canada's major exports, gave up its
earlier gains as hopes of a comprehensive U.S.-China trade deal
faded and a new poll showed analysts expected U.S. oil crude
inventories to have risen last week. U.S. crude oil futures
       settled 0.1% lower at $52.75 a barrel.
    At 3:53 p.m. (1953 GMT), the Canadian dollar          was
trading nearly unchanged at 1.3308 to the greenback, or 75.14
U.S. cents. The currency, which weakened 0.4% last week, traded
in a range of 1.3291 to 1.3331.
    Canada's employment report for September is due on Friday. A
robust domestic jobs market this year has supported the Bank of
Canada's decision to leave interest rates on hold even as some
of its global peers, including the U.S. Federal Reserve and the
European Central Bank, have eased.
    The Canadian dollar will gain ground against its U.S.
counterpart over the coming year, supported by a strengthening
of the domestic economy and a narrower gap between Canadian and
U.S. interest rates, a Reuters poll predicted.             
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries on Monday. The two-year
           fell 7 Canadian cents to yield 1.452% and the 10-year
            was down 50 Canadian cents to yield 1.287%.
    Earlier in the day, the 10-year yield touched its lowest
intraday level since Sept. 5 at 1.226%.  

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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