May 9, 2017 / 9:23 PM / 3 months ago

CANADA FX DEBT-C$ weakens as oil falls, greenback climbs

 (Adds strategist quotes and updates prices)
    * Canadian dollar at C$1.3728, or 72.84 U.S. cents
    * Bond prices lower across yield curve

    By Fergal Smith
    TORONTO, May 9 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as prices of oil, one of
Canada's major exports, fell and the greenback climbed against a
basket of major currencies.
    The U.S. dollar        posted broad gains as foreign
exchange markets swung back to bets on improving growth and
tighter monetary policy. The pickup in investor sentiment has
been bolstered by historically low U.S. stock market volatility
and last weekend's French presidential election result.
            
    U.S. crude        prices settled 55 cents lower at $45.88 a
barrel, pressured by a rising greenback and increasing U.S.
crude output that has shaken investors' faith in the ability of
Organization of the Petroleum Exporting Countries to rebalance
the market.             
    "Absent any meaningful Canadian dollar data this week we are
likely to see the Canadian dollar take its direction from oil
prices and broader commodity prices in general, as well as the
U.S. dollar," said Scott Smith, chief market strategist at
Viewpoint Investment Partners.
    "One of the continued risks for the Canadian dollar is that
we see the U.S. dollar recover from its recent bout of
softness."
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.3728 to the greenback, or 72.84 U.S. cents, down
0.3 percent, according to Reuters data.
    The currency traded in a range of C$1.3671 to C$1.3753.
    The loonie hit a 14-year low on Friday at C$1.3793. It has
been pressured recently by lower commodity prices, concerns
about a possible North American Free Trade Agreement
renegotiation and investor wariness about how troubles at
alternative lender Home Capital Group Inc          could affect
Canada's real estate market.
    Home Capital said on Tuesday an unnamed third party intends
to buy up to C$1.50 billion in mortgages, as Canada's biggest
non-bank lender attempts to halt customer withdrawals.
               
    Data on Tuesday showed the value of domestic building
permits tumbled 5.8 percent in March from February.             
    British Columbians head to the polls after a tight race
between the ruling right-of-center Liberal Party and the
opposition left-leaning New Democratic Party. A loss for the
Liberals could derail big oil and gas projects in the province.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 2.5 Canadian cents to yield 0.722 percent and the 10-year
            declined 29 Canadian cents to yield 1.621 percent.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)
  
 

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