May 4, 2018 / 8:39 PM / 6 months ago

CANADA FX DEBT-C$ hits 1-month low but pares losses as oil climbs

    * Canadian dollar at C$1.2862, or 77.75 U.S. cents
    * Price of oil rises 1.9 percent
    * Loonie falls 0.3 percent on the week
    * Bond prices little changed across yield curve

    By Fergal Smith
    TORONTO, May 4 (Reuters) - The Canadian dollar weakened to a
one-month low against a broadly firmer greenback on Friday, but
the sell-off lost momentum as oil prices climbed and domestic
data pointed to a strengthening of economic activity.
    The U.S. dollar        climbed against a basket of major
currencies after briefly dropping on disappointing U.S.
employment data for April.             
    The price of oil, one of Canada's major exports, rose to its
highest in more than three years as global supplies remained
tight and the market awaited news from Washington on possible
new U.S. sanctions against Iran.             
    U.S. crude oil futures        settled 1.9 percent higher at
$69.72 a barrel.   
    The pace of purchasing activity in Canada accelerated in
April as prices climbed, according to Ivey Purchasing Managers
Index data. The seasonally adjusted index jumped to 71.5 from
59.8 in March.             
    Speculators have raised bearish bets on the Canadian dollar,
data from the U.S. Commodity Futures Trading Commission and
Reuters calculations showed. As of May 1, net short positions
had increased to 27,535 contracts from 25,144 a week earlier.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.2862 to the greenback, or 77.75
U.S. cents.
    The currency touched its weakest since April 3 at C$1.2918.
For the week it declined 0.3 percent.
    Friday's modest loss for the loonie came as the Trump
administration drew a hard line in trade talks with China.
            
    Canada's commodity-linked economy could be hurt if the trade
spat between the two economic giants slows global growth.
    Canadian government bond prices were little changed across
the yield curve, with the two-year            flat to yield 1.91
percent and the 10-year             falling 4 Canadian cents to
yield 2.329 percent.

 (Reporting by Fergal Smith
Editing by James Dalgleish)
  
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