January 7, 2019 / 2:32 PM / 11 days ago

CANADA FX DEBT-C$ climbs to 4-week high as oil adds to rally

    * Canadian dollar rises 0.1 percent against the greenback
    * Loonie touches its strongest level since Dec. 13 at 1.3340
    * Price of U.S. oil rises 1.3 percent
    * Canadian bond prices gain across a flatter yield curve

    TORONTO, Jan 7 (Reuters) - The Canadian dollar strengthened
to a nearly four-week high against its U.S. counterpart on
Monday as oil prices climbed and the greenback broadly declined,
while investors awaited a Bank of Canada interest rate decision
later in the week.
    At 9:18 a.m. (1418 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3361 to the greenback, or 74.84
U.S. cents. The currency, which rose nearly 2 percent last week,
touched its strongest intraday level since Dec. 13 at 1.3340.
    The U.S. dollar        weakened on growing bets the Federal
Reserve will halt its multi-year rate hike cycle.             
    Expectations have also fallen for further tightening from
the Bank of Canada. The central bank, which has hiked five times
since July 2017, is expected on Wednesday to leave its benchmark
interest rate unchanged at 1.75 percent as it worries about the
impact on the economy of a sharp drop since October in the price
of oil, one of Canada's major exports.
    On Monday, oil extended a rally from 18-month lows hit in
December with support from OPEC production cuts and steadying
equity markets. U.S. crude        prices were up 1.3 percent at
$48.58 a barrel.                         
    Greater calm for stocks comes as U.S. officials meet their
counterparts in Beijing this week for the first face-to-face
talks since U.S. President Donald Trump and Chinese President Xi
Jinping agreed in December to a 90-day truce in a trade war that
has roiled global markets.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 2 Canadian cents to yield 1.841 percent and the
10-year             gained 17 Canadian cents to yield 1.910
percent.
    Last Thursday, the 10-year yield hit its lowest since August
2017 at 1.814 percent. 

 (Reporting by Fergal Smith
Editing by Alistair Bell)
  
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