July 13, 2020 / 8:06 PM / in a month

CANADA FX DEBT-C$ dips as investors turn cautious amid rising COVID-19 cases

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar falls 0.1% against the greenback
    * Canadian producer prices gain 0.4% in June 
    * Price of U.S. oil falls 1.1%
    * Canadian bond yields little changed

    By Fergal Smith
    TORONTO, July 13 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday as rising coronavirus
infections kept risk appetite in check and ahead of an interest
rate decision this week from the Bank of Canada.    
    Wall Street gave up its earlier gains and the price of oil,
one of Canada's major exports, settled 1.1% lower at $40.10 a
barrel as a record daily rise in the amount of global
coronavirus cases fanned fears of renewed government lockdowns.
            
    "The concurrent declines in oil and equities appear to be
holding back CAD here," said Erik Nelson, a currency strategist
at Wells Fargo.
    Canada runs a current account deficit and is a major
exporter of commodities, so the loonie tends to be sensitive to
the global flow of trade and capital.    
    The Bank of Canada is moving to help keep down long-term
bond yields as Ottawa cranks up issuance to pay for
COVID-19-related spending, analysts say, with the central bank
raising the amount of 30-year bonds it buys in its quantitative
easing program.              
    The BoC is expected to leave its benchmark interest rate at
a record low of 0.25% on Wednesday.           
    The loonie        was trading on Monday 0.1% lower at 1.3602
to the greenback, or 73.52 U.S. cents. The currency traded in a
range of 1.3536 to 1.3610. On Friday, it hit a 10-day low at
1.3631.     
    Ontario will move most regions excluding Toronto into the
third stage of reopening on Friday, Premier Doug Ford said, as
Canada's most-populous province lifts lockdowns put in place to
limit the spread of the new coronavirus.               
    Canadian government bond yields were little changed, with
the 10-year             holding around 0.550%.
    Producer prices in Canada gained 0.4% in June from May,
primarily on higher prices for energy and petroleum products,
Statistics Canada said in a preliminary flash estimate.
            

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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