November 5, 2019 / 2:51 PM / 8 days ago

CANADA FX DEBT-Canadian dollar near one-week high as trade hopes climb

    * Canadian dollar rises 0.1% against greenback
    * Canada's trade deficit narrows to C$978 million in Sept.
    * Price of U.S. oil increases 0.9%
    * Canadian bond prices fall across steeper yield curve

    TORONTO, Nov 5 (Reuters) - The Canadian dollar rose to near
a one-week high against its U.S. counterpart on Tuesday as data
showed a narrowing in Canada's trade deficit and investors
became more optimistic of a trade deal between the United States
and China.
    At 9:34 a.m. (1434 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3139 to the greenback, or 76.11 U.S.
cents. The currency touched its strongest intraday level since
Oct. 30 at 1.3116.    
    World shares climbed back towards record highs as hopes that
Washington may roll back some of the tariffs it has imposed on
Chinese imports rekindled optimism about the global economic
outlook.             
    Canada is a major exporter of commodities, including oil, so
its economy could benefit from a pickup in global growth.
    U.S. crude        prices rose 0.9% to $57.06 a barrel,
buoyed by prospects of a U.S.-China trade deal.             
    Canada's trade deficit narrowed in September to C$978
million, compared with a revised August deficit of C$1.24
billion, as exports and imports declined, data from Statistics
Canada showed.             
    Separate data from the Toronto Real Estate Board (TREB)
showed that Toronto's housing market tightened in October, with
the average price rising 5.5% on a year-over-year basis.
            
    The Bank of Canada has worried that an interest rate cut
could trigger higher financial vulnerabilities, such as too much
borrowing by Canadians.                          
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 5 Canadian cents to yield 1.623% and the 10-year
            was down 52 Canadian cents to yield 1.584%.
    The gap between Canada's 2- and 10-year yields narrowed by
3.1 basis points to a spread of 3.9 basis points in favor of the
shorter-dated bond, the narrowest gap since July 30.

 (Reporting by Fergal Smith
Editing by Paul Simao)
  
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