November 15, 2018 / 1:38 PM / a month ago

CANADA FX DEBT-C$ edges higher as oil price steadies, China-U.S. trade hopes grow

    * Canadian dollar rises 0.1 percent against greenback
    * Canadian bond prices rise across flatter yield curve
    * Canada-U.S. 30-year spread touches widest since July 2011

    TORONTO, Nov 15 (Reuters) - The Canadian dollar firmed
against its broadly stronger U.S. counterpart on Thursday as oil
prices stabilized and signs emerged that the United States and
China were working to resolve a trade war.
     China has delivered a written response to U.S. demands for
wide-ranging trade reforms, three U.S. government sources said,
a move that could trigger more formal negotiations to resolve a
trade war between the world's top economies.             
    Canada is a major exporter of commodities, including oil,
and runs a current account deficit, so its economy could benefit
if prospects improve for the flow of trade or capital. 
    The price of oil stabilized after losing nearly 7 percent
over the previous three days, though concern over the prospect
of an oversupplied market next year continued to weigh on prices
despite OPEC's message that it may cut crude output.
            
    U.S. crude        prices were up 0.2 percent at $56.34 a
barrel.
    At 8:17 a.m. (1317 GMT), the Canadian dollar          was
trading 0.1 percent higher at 1.3223 to the greenback, or 75.63
U.S. cents.
    The loonie traded in a narrow range of 1.3210 to 1.3249. On
Wednesday, the currency matched Tuesday's intraday low of
1.3264, which was its weakest in nearly four months.
    The U.S. dollar        rose and traders bought into the
safe-haven yen on Thursday after Britain's Brexit deal with the
European Union was plunged into uncertainty, spooking investors
across currency markets.                     
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 5.5 Canadian cents to yield 2.25 percent and the
10-year             climbed 36 Canadian cents to yield 2.393
percent.
    The gap between Canada's 30-year yield and its U.S.
equivalent widened by 2.3 basis points to a spread of 90.3 basis
points in favor of the U.S. bond, its widest since July 2011.
    Canada and China will continue to work together towards an
"eventual" free trade deal, Canadian Prime Minister Justin
Trudeau said.             

 (Reporting by Fergal Smith
Editing by Susan Thomas)
  
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