August 7, 2019 / 1:49 PM / 4 months ago

CANADA FX DEBT-C$ hits 7-week low as investors fret over trade tensions

    * Canadian dollar fall 0.5% against the greenback
    * The loonie touches its lowest point since June 19
    * U.S. crude oil price decrease by 2.4%
    * Canada's two-year yield hits a near two-year low

    By Levent Uslu
    TORONTO, Aug 7 (Reuters) - The Canadian dollar extended its
losses, falling to a near seven-week low against its U.S.
counterpart on Wednesday as escalating global trade tensions
worried investors.
    A year-long U.S.-China trade war has boiled over as
Washington accused Beijing this week of manipulating its
currency after China let the yuan drop to its lowest point in
more than a decade.             
    Canada exports many commodities, including oil, so its
economy could be hurt by an escalation of trade tensions.
    At 9:11 a.m. (1311 GMT), the Canadian dollar          was
trading 0.5% lower at 1.3336 to the greenback, or 74.99 U.S.
cents. The currency hit its lowest intraday level since June 19
at 1.3344.
    Last month, the Bank of Canada highlighted the risks that
trade wars pose to the global economy as it left its benchmark
interest rate unchanged at 1.75%.             
    Chances of a Bank of Canada interest rate cut this year have
climbed to more than 90% from about 40% after the release of
data last week showing the economy strengthened more than
expected in June, the overnight index swap market indicated.
          .
    New Zealand's          dollar fell heavily on Wednesday
after its central bank stunned markets with an aggressive
interest rate cut and said negative rates were possible,
fuelling bets on more global easing.             
    Meanwhile, the price of oil, one of Canada's major exports,
extended recent heavy losses as rising global trade tensions
weighed on the outlook for global energy demand.             
    U.S. crude oil futures        were down 2.4% at $52.32 a
barrel.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. treasuries. The two-year           
rising 14.5 Canadian cents to yield 1.277% and the 10-year
            was up 90 Canadian cents to yield 1.146%.
    The two-year bond yield hit its lowest intraday level since
September 2017 at 1.277%.

 (Reporting by Levent Uslu
Editing by Nick Zieminski)
  
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