November 30, 2018 / 9:15 PM / 17 days ago

CANADA FX DEBT-C$ dips on potential rate hike caution due to lower oil prices

 (Adds dealer quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.1 percent against greenback
    * Loonie falls 1 percent for the month
    * Price of U.S. oil falls 1 percent
    * Canada's economy grows at 2 percent pace in Q3
    * Canadian bond prices rise across yield curve

    By Fergal Smith
    TORONTO, Nov 30 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Friday as investors bet that
lower oil prices, and data showing slower economic growth, would
trigger greater caution from the Bank of Canada about raising
interest rates.
    At 3:31 p.m. (2031 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3293 to the greenback, or 75.23
U.S. cents. The currency, which on Wednesday touched a
five-month low at 1.3360, traded in a range of 1.3273 to 1.3334.
    For the week, the loonie fell 0.4 percent, while it was down
1 percent for the month.
    "One of the reasons you are seeing the Canadian dollar a
little weaker here is that you have energy prices a little lower
today," said Scott Lampard, head of global markets, at HSBC Bank
Canada.
    "Whether it is the absolute level (of oil) or the ongoing
weakness you are seeing, I think it's creating an expectation
that the bank (Bank of Canada) is going to be a little bit more
cautious to raise rates going forward," Lampard said.
    The central bank has raised interest rates five times since
July 2017. Chances of another hike as soon as next week have
slumped to about 10 percent from 30 percent earlier in the
month, data from the overnight index swaps market showed.
          
    The price of oil, one of Canada's major exports, has fallen
about 34 percent since October, pressured by concerns of
oversupply.
    On Friday, U.S. crude oil futures settled 1 percent lower at
$59.93 a barrel despite expectations that the Organization of
the Petroleum Exporting Countries (OPEC) and Russia would agree
some form of production cut next week.             
    Canada's economy grew at an annualized rate of 2.0 percent
in the third quarter, matching analysts' forecasts, data from
Statistics Canada showed.              
    But some market players were disappointed by the composition
of the data and a contraction in gross domestic product for the
month of September.    
    The leaders of Mexico, Canada and the United States signed
the revamped North American trade pact Friday, which could
reduce uncertainty for Canada's economy. But there was little
market reaction, with investors focused on U.S.-China trade
talks at the G20 meeting in Buenos Aires.
                        
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
climbed 27 Canadian cents to yield 2.272 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and Tom
Brown)
  
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