April 21, 2020 / 1:32 PM / 4 months ago

CANADA FX DEBT-Canadian dollar slides to 3-week low as oil prices crash

    * Canadian dollar falls 0.8% against the greenback
    * Price of Brent crude oil decreases about 19%
    * Canadian retail sales rise 0.3% in February
    * Canadian bond yields decline across a flatter curve

    By Fergal Smith
    TORONTO, April 21 (Reuters) - The Canadian dollar weakened
to a near three-week low against its U.S. counterpart on
Tuesday, as plunging oil prices overshadowed a
stronger-than-expected increase for domestic retail sales in
February.
    Benchmark Brent and U.S. oil futures for June delivery
plunged to around two-decade lows, a day after U.S. May futures
sank into negative territory for the first time in history as
demand tumbled due to the coronavirus crisis. Brent crude oil
futures         lost 19.1% to $20.70.             
    Canada is a major exporter of crude oil.    
    "The CAD has taken a hit from the combined impact of weak
crude prices and the push higher in the VIX index back above 40
over the past two sessions," Shaun Osborne, chief FX strategist
at Scotiabank, said in a note.    
    The VIX index        is a measure of expected stock market
volatility. It was trading about 8% higher at 47.34 on Tuesday.
    At 9:09 a.m. (1309 GMT), the Canadian dollar          was
trading 0.8% lower at 1.4230 to the greenback, or 70.27 U.S.
cents. The currency touched its weakest intraday level since
April 2 at 1.4263.    
    Canadian retail sales were up 0.3% month-over-month in
February, before social distancing measures began, on higher
sales at motor vehicle and parts dealers, Statistics Canada
said. Analysts had forecast a 0.2% increase.             
    "February feels like a lifetime ago" Benjamin Reitzes,
Canadian rates & macro strategist at BMO Capital Markets, said
in a note. "Expect a very different tone for retail sales over
the next few reports."
    Canada's inflation report for March is due on Wednesday,
which could help guide expectations for additional easing
measures from the Bank of Canada.
    The Bank of Canada has slashed interest rates by 150 basis
points since March and begun buying Canadian government bonds.
Last week, the central bank said it would broaden its
asset-purchase, or quantitative easing, program to include
provincial and corporate debt.                  
    Canadian government bond yields were lower across a flatter
curve, with the 10-year             down 6 basis points at
0.568%.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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