November 5, 2019 / 9:11 PM / a month ago

CANADA FX DEBT-Canadian dollar turns lower as trade hopes boost greenback

 (Adds strategist quote and details on activity; updates prices)
    * Canadian dollar falls 0.1% against greenback
    * Canada's trade deficit narrows to C$978 million in Sept.
    * Price of U.S. oil increases 1.2%
    * Canadian bond prices fall across steeper yield curve

    By Fergal Smith
    TORONTO, Nov 5 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Tuesday, pulling back from an
earlier six-day high as the greenback benefited from hopes the
United States and China were moving closer to a trade deal.
    At 3:14 p.m. (2014 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3157 to the greenback, or 76.01 U.S.
cents. The currency's weakest level was 1.3178, while it touched
its strongest since last Wednesday at 1.3116.
    The U.S. dollar        climbed against a basket of major
currencies, including the safe-haven yen and Swiss franc, as
increased appetite for risk spurred investors to seek
higher-yielding currencies.             
    "The (U.S.) dollar is looking a bit cheap on our dashboard
and we think this development on trade, incremental optimism
there, pared with a rebound in ISM services is probably helping
to fuel the dollar again," said Mazen Issa, senior FX strategist
at TD Securities.
    Data from the Institute for Supply Management (ISM) showed
that activity in the U.S. services sector picked up in October
to a faster-than-expected pace.             
    Hopes for a U.S.-China trade deal also boosted the price of
oil, one of Canada's major exports. U.S. crude oil futures
       settled 1.2% higher at $57.23 a barrel.             
    Canada's trade deficit narrowed in September to C$978
million, compared with a revised August deficit of C$1.24
billion, as imports declined more than the drop in exports, 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.
            
    Canadian government bond prices were lower across a steeper
yield curve, with the two-year            down 8 Canadian cents
to yield 1.638% and the 10-year             falling 74 Canadian
cents to yield 1.608%.
    The gap between Canada's 2- and 10-year yields narrowed by 4
basis points to a spread of 3 basis points in favor of the
shorter-dated bond, the narrowest gap since July 29.

 (Reporting by Fergal Smith; Editing by Paul Simao and Peter
Cooney)
  
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