June 13, 2019 / 8:16 PM / 6 months ago

CANADA FX DEBT-Canadian dollar pares this week's decline as oil rallies

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie gains for first time since Friday
    * Price of U.S. oil increases 2.2%
    * Canadian bond prices rise across a steeper yield curve

    By Fergal Smith
    TORONTO, June 13 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Thursday after a
three-day run of declines, as oil prices rallied and
expectations for Federal Reserve interest rate cuts were boosted
by tame U.S. inflation data.
    The price of oil, one of Canada's major exports, rose after
a suspected attack on two tankers in the Gulf of Oman near Iran
and the Strait of Hormuz, through which a fifth of global oil
passes. U.S. crude oil futures        settled 2.2% higher at
$52.28 a barrel.                 
    "The market right now is really focusing on oil ... whenever
you have that positive development, it normally provides good
support for the Canadian dollar," said Darren Richardson, chief
operating officer at Richardson International Currency Exchange
Inc.
    The loonie has also benefited this month from "dovish
comments" by Federal Reserve officials, Richardson said.
    U.S. Treasury yields fell on Thursday as data showed U.S.
import prices declined by the most in five months, the latest
indication of muted inflation pressures, which could strengthen
the case for the Fed to cut interest rates this year.
            
    At 3:55 p.m. (1955 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3332 to the greenback, or 75.01 U.S.
cents. The currency, which has declined 0.5% this week, traded
in a range of 1.3300 to 1.3342.
    Canadian household debt as a share of income, a measure
closely watched by policymakers, slipped to 173.0% in the first
quarter from 173.7% in the fourth quarter, but was still near
record levels, data from Statistics Canada showed.             
    A survey from Export Development Canada, completed in March
and April, showed that Canadian exporters' confidence fell to a
seven-year low amid the disruption caused by trade wars and the
imposition of U.S. tariffs.             
    The Bank of Canada has repeatedly identified the U.S.-China
trade war as one of the main risks facing the economy.
    Canadian government bond prices were higher across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 8.5 Canadian cents to yield 1.402% and the
10-year             was up 39 Canadian cents to yield 1.455%.
    That left the 10-year yield near last week's two-year low of
1.410%.

 (Reporting by Fergal Smith; Editing by Peter Cooney)
  
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