June 7, 2017 / 1:54 PM / in 2 months

CANADA FX DEBT-C$ strengthens to 1-week high; pares gains as oil prices fall

3 Min Read

    * Canadian dollar at C$1.3440, or 74.40 U.S. cents
    * Loonie touches its strongest since May 29 at C$1.3427
    * Bond prices lower across a steeper yield curve

    TORONTO, June 7 (Reuters) - The Canadian dollar strengthened
on Wednesday to a 1-week high against its U.S. counterpart,
although it pared some gains as oil prices fell and investors
braced for a trio of major events on Thursday.
    Modest gains for the loonie came as the Organisation for
Economic Cooperation and Development forecast that Canada's
economy will grow 2.8 percent this year after a 1.4 percent
expansion in 2016.             
    The OECD said higher interest rates will help cool "booming
housing markets" and that macro-prudential measures should be
tightened further to address economic and financial risks
related to the housing market. 
    Prices of oil, one of Canada's major exports, fell on
renewed concerns about the efficacy of Organization of the
Petroleum Exporting Countries-led production cuts due to rising
tensions within the export group over Qatar and growing U.S.
output.             
    U.S. crude        prices were down 1.22 percent at $47.6 a
barrel.
    The European Central Bank meeting, a parliamentary election
in the UK and testimony by former U.S. FBI Director James Comey
to a Senate committee are due on Thursday.          
    At 9:35 a.m. ET (1335 GMT), the Canadian dollar          was
trading at C$1.3440 to the greenback, or 74.40 U.S. cents, up
0.1 percent.
    The currency's weakest level of the session was C$1.3461,
while it touched its strongest since May 29 at C$1.3427.
    Against the euro, the Canadian dollar strengthened to
C$1.5109 after a report suggesting the European Central Bank,
rather than swinging decisively towards a tighter monetary
stance this week, is preparing to cut its outlook for inflation.
                
    The Bank of Canada's review of developments in the financial
system is also due on Thursday, followed by a news conference
with Governor Stephen Poloz. Investors will weigh Poloz's
assessment of the health of the housing and mortgage markets in
light of recent troubles at non-bank lender Home Capital.
    The value of Canadian building permits declined 0.2 percent
in April, the third monthly decrease in a row, data from
Statistics Canada showed.             
    Canadian government bond prices were lower across a steeper
yield curve, paring some recent gains in sympathy with U.S.
Treasuries. The two-year            price dipped 2 Canadian
cents to yield 0.723 percent and the 10-year            
declined 19 Canadian cents to yield 1.415 percent.
    On Tuesday, the 10-year yield touched a nearly 7-month low
at 1.373 percent.
    Canada's employment report for May is due on Friday.    

    
 (Reporting by Fergal Smith; Editing by Nick Zieminski)
  
 

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