December 6, 2018 / 2:28 PM / 7 days ago

CANADA FX DEBT-C$ falls as Bank of Canada's Poloz says economy weaker than expected

    * Oil loses 3 percent in volatile trade as OPEC meets
    * Bank of Canada frets low oil prices 

    By Saqib Iqbal Ahmed
    Dec 6 (Reuters) - The Canadian dollar fell against its U.S.
counterpart on Thursday to a nearly 18-month low, as Bank of
Canada Governor Stephen Poloz said the economy was weaker than
forecast and predicted low oil prices would cut growth.
    Poloz's comments were likely to reinforce market
expectations that the pace of future rate hikes will ease off.
    At 9:17 a.m. (14:17 GMT), the Canadian dollar          was
trading down 0.4 percent against the greenback, at 1.3415 or
74.54 U.S. cents. The currency hit its weakest level since June
12, 2017 at 1.3445 earlier in the session.
    Poloz, speaking a day after the central bank kept interest
rates on hold, repeated that more tightening would be needed to
keep inflation on track but added the pace would be decidedly
data-dependent.             
    Much of the bank's discussion ahead of the interest rate
announcement on Wednesday had been focused on oil, he said.
Prices for crude, one of Canada's main exports, are sinking amid
a supply glut and this is hurting Alberta, the western province
which is home to the domestic industry.
    Oil prices tumbled about 3 percent in a volatile session on
Thursday after OPEC signaled it may agree to a smaller output
cut than expected and as concern over the economic impact of
trade tensions hit global stock markets.             
    Canada's trade deficit widened in October to C$1.17 billion
($0.87 billion), as both imports and exports dipped, Statistics
Canada said on Thursday.             
    "The unexpectedly large widening of the trade deficit in
October is a sign of things to come, with continued falls in
energy prices in November set to cause export values to decline
further," Stephen Brown, senior Canada economist at Capital
Economics, said in a note.
    The Canadian dollar will rally over the coming year if oil
prices recover and the Bank of Canada continues lifting interest
rates, according to a poll of currency strategists who have
become less bullish on prospects for the currency.             
    On Thursday, broader risk sentiment was weak and global
stock markets slumped for a third day running as the arrest of a
top executive of Chinese tech giant Huawei in Canada for
extradition to the United States fed fears of fresh tensions
between the two economic superpowers.
    Canadian government bond yields were lower on the day, with
the yield on the 10-year             at 2.078 percent, down from
2.135 percent at the close of the previous session.

 (Reporting by Saqib Iqbal Ahmed; Editing by Bernadette Baum)
  
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