May 7, 2018 / 8:20 PM / 20 days ago

CANADA FX DEBT-C$ falls vs stronger greenback as investors weigh NAFTA talks

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.2892, or 77.57 U.S. cents
    * Price of oil rises 1.5 percent
    * Bond prices mixed across flatter yield curve

    By Fergal Smith
    TORONTO, May 7 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday as the greenback broadly
rose, but the currency stuck to its recent holding pattern as
oil prices climbed and investors weighed talks to update the
NAFTA trade deal.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.4 percent lower at C$1.2892 to the greenback, or 77.57
U.S. cents. It traded in a range of C$1.2840 to C$1.2900.    
    The loonie on Friday hit a one-month low at C$1.2918 but it
has mostly been confined to a narrow range over the past two
weeks.
    "We are just waiting for a break," said Eric Theoret,
currency strategist at Scotiabank. "We do see the Canadian
dollar headed higher after this consolidation."
    Senior Canadian, U.S. and Mexican officials trying to rescue
slow-moving talks to update the North American Free Trade
Agreement met on Monday in a new bid to resolve key issues
before regional elections complicate the process.             
    "As we get closer to a resolution we could see CAD
strengthen on the back of that," Theoret said.
    Canada sends about 75 percent of its exports to the United
States.
    The loonie lost ground even as the price of oil, one of
Canada's major exports, rose to its highest since late 2014,
boosted by the latest troubles for Venezuelan oil company PDVSA
and a looming decision on whether the United States will
re-impose sanctions on Iran.                 
    U.S. crude oil futures        settled 1.5 percent higher at
$70.73 a barrel.    
    The U.S. dollar        hit a 2018 peak against a basket of
currencies as investors increased bets that rising interest
rates and inflation in the United States would boost the
greenback.              
    The world's growing economies will have to find ways to cope
with an end to central bank stimulus, said Bank of Canada Deputy
Governor Timothy Lane.             
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            down 1 Canadian cent
to yield 1.916 percent and the 10-year             rising 5
Canadian cents to yield 2.323 percent.
    Canada's jobs report for April is due on Friday.

 (Reporting by Fergal Smith; Editing by David Gregorio and James
Dalgleish)
  
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