August 1, 2019 / 9:09 PM / 20 days ago

CANADA FX DEBT-C$ hits a 6-week low as oil slumps on tariff threat

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    * Canadian dollar falls 0.2% against the greenback
    * Oil prices decrease by 7.9%
    * Bond prices move higher across the maturity curve

    By Levent Uslu
    TORONTO, Aug 1 (Reuters) - The Canadian dollar weakened to a
six-week low against its U.S. counterpart on Thursday as oil
prices slumped, pressured by the prospect of additional U.S.
tariffs on Chinese goods.
    In a series of tweets, U.S. President Donald Trump said he
would slap 10% tariffs on $300 billion of Chinese imports
starting Sept. 1.             
    Trump's comments had a "knock-on effect on commodities,
particularly oil," said Michael Goshko, corporate risk manager
at Western Union business solutions. "The Canadian dollar is a
particularly oil-sensitive currency."
    The price of oil, one of Canada's major exports, fell to the
lowest level in about six weeks. U.S. crude oil futures       
settled 7.9% lower at $53.95 a barrel.             
    At 4:39 p.m. (2039 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3213 to the greenback, or 75.68 U.S.
cents. The currency, which fell 0.8% against the U.S. dollar in
July, hit its lowest intraday level since June 20 at 1.3248.    
    The loonie lost ground despite data showing that Canadian
manufacturing activity expanded for the first time in four
months in July. The IHS Markit Canada Manufacturing Purchasing
Managers' index (PMI) rose to a seasonally adjusted 50.2 last
month from 49.2 in June.             
    The PMI data helped limit the decline for the Canadian
dollar, said Simon Harvey, a market analyst at Monex Canada and
Monex Europe.
    Firm domestic data has supported the Bank of Canada's view
that the economy is picking up, Harvey said.
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 13 Canadian cents to
yield 1.479% and the 10-year             rising 74 Canadian
cents to yield 1.399%.    

 (Reporting by Levent Uslu; Editing by Peter Cooney)
  
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