October 10, 2019 / 1:12 PM / a month ago

CANADA FX DEBT-Loonie recovers from one-week low as investors eye trade talks

    * Canadian dollar rises 0.2% against the greenback
    * Loonie touches a one-week low intraday at 1.3346
    * Price of U.S. oil increases nearly 1%
    * Canadian bond prices fall across a steeper yield curve

    TORONTO, Oct 10 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, recovering from an
earlier one-week low, as investors hoped for progress in trade
talks between the United States and China.
    The U.S. dollar        was on track for its biggest daily
drop in five weeks against its rivals as the prospects of a
partial U.S.-China trade deal fueled appetite for trade-oriented
currencies. High-level negotiators from the two countries were
due to meet on Thursday for the first time since late July.
            
    Canada is more dependent on trade than some other countries,
such as the United States. At C$1.5 trillion, trade of goods and
services, including exports of oil, accounted for 66% of
Canada's economy in 2018, according to government data.
    U.S. crude oil futures        were up nearly 1% at $53.1 a
barrel             
    At 8:56 a.m. (1256 GMT), the Canadian dollar          was
trading 0.2% higher at 1.3316 to the greenback, or 75.10 U.S.
cents. The currency touched its weakest intraday level since
last Thursday at 1.3346.
    The gain for the loonie came as data from Statistics Canada
showed that new home prices rose 0.1% in August, the first
increase since July 2018.             
    Canada's employment report for September is due on Friday,
which can help guide expectations for the Bank of Canada policy
outlook.
    Robust job gains this year have supported the central bank's
decision to leave its benchmark interest rate on hold at 1.75%
this year even as some of its peers, including the U.S. Federal
Reserve and the European Central Bank, have reduced borrowing
costs.
    Canadian government bond prices were lower across a steeper
yield curve after U.S. data showed that consumer prices were
unchanged in September. The two-year            price fell 1
Canadian cent to yield 1.48% and the 10-year             was
down 19 Canadian cents to yield 1.331%.             

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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