December 4, 2018 / 2:24 PM / 8 days ago

CANADA FX DEBT-C$ builds marginally on Monday's rally as oil prices climb

    * Canadian dollar rises 0.1 percent against the greenback
    * Price of U.S. oil rises 1.2 percent
    * Canadian bond prices trade mixed across flatter yield
curve
    * Canada-U.S. 10-year spread narrows by 3.4 basis points 

    TORONTO, Dec 4 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Tuesday, adding modestly to its
gains from the day before as crude oil prices rallied and the
greenback broadly fell.
    The price of oil, one of Canada's major exports, extended
this week's gains ahead of expected output cuts by the
Organization of the Petroleum Exporting Countries and a
reduction in Canadian supply.             
    U.S. crude        prices were up 1.2 percent at $53.58 a
barrel. 
    The discount on Western Canada Select was slashed on Monday
after Alberta Premier Rachel Notley said over the weekend that
the government would force producers to cut output by 8.7
percent until excess crude in storage is reduced.             
    The U.S. dollar        declined against a basket of major
currencies, pressured by a decline in U.S. Treasury yields.
    At 9:03 a.m. (1403 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3190 to the greenback, or 75.82
U.S. cents. The currency traded in a range of 1.3164 to 1.3201.
    On Monday, the loonie climbed to its highest in nearly two
weeks at 1.3160 after the United States and China agreed to a
90-day truce in their trade war, boosting the outlook for the
global economy.
    But stocks retreated on Tuesday as investors turned
skeptical of the chances of a breakthrough in the U.S.-China
trade talks.             
    The Bank of Canada has worried that the conflict is weighing
on global growth and commodity prices. It is due to announce a
policy decision on Wednesday.
    A strong majority of economists polled by Reuters said the
central bank will wait until early next year before it raises
interest rates again and that two more rate rises will follow by
end-2019.             
    Canada's trade report for October is due on Thursday and the
November employment report is due on Friday.    
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 1.5 Canadian
cents to yield 2.167 percent and the 10-year             flat to
yield 2.236 percent.
    The gap between Canada's 10-year yield and its U.S.
counterpart narrowed by 3.4 basis points to a spread of 72.1
basis points in favor of the U.S. bond.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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