May 22, 2018 / 1:36 PM / 6 months ago

CANADA FX DEBT-C$ continues to rally as wholesale trade jumps

    * Canadian dollar at C$1.2769, or 78.31 U.S. cents
    * Loonie touches its strongest since Thursday at C$1.2749
    * Bond prices mixed across a steeper yield curve

    TORONTO, May 22 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Tuesday, adding to Monday's
rally as oil prices rose and domestic data showed a
stronger-than-expected gain for wholesale trade.
    Canadian wholesale trade jumped by 1.1 percent in March,
greater than the 0.6 percent gain forecast by analysts, thanks
largely to strength in the motor vehicle and parts subsector,
Statistics Canada said.             
    The price of oil, one of Canada's major exports, was
supported by concern that falling Venezuelan crude output and a
potential drop in Iranian exports could further tighten global
supply.             
    U.S. crude        prices were up 0.2 percent at $72.39 a
barrel.
    At 9:15 a.m. EDT (1315 GMT), the Canadian dollar         
was trading 0.1 percent higher at C$1.2769 to the greenback, or
78.31 U.S. cents.
    The currency, which rose 0.8 percent on Monday, touched its
strongest since Thursday at C$1.2749.     
    Gains this week for the loonie have come as signs of easing
trade tensions between the United States and China, the world's
two largest economies, boosted global equity markets.
            
    However, U.S. Treasury Secretary Steven Mnuchin on Monday
said major issues remained in talks between the United States,
Mexico and Canada to renegotiate the North American Free Trade
Agreement.             
    Canada sends about 75 percent of its exports to the United
States, so its economy could be hurt if a deal on NAFTA is not
reached.
    Canadian government bond prices were mixed across a steeper
yield curve as trading resumed following Monday's Victoria Day
holiday.
    The two-year            was up 6 Canadian cents to yield
2.032 percent and the 10-year             declined 5 Canadian
cents to yield 2.492 percent. On Thursday, the 10-year yield
touched its highest in more than four years at 2.537 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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