June 15, 2018 / 8:38 PM / 3 months ago

CANADA FX DEBT-C$ hits near 1-year low as oil prices slide

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.3185, or 75.84 U.S. cents
    * Canadian manufacturing sales fall 1.3 percent in April 
    * Loonie hits weakest since June 27, 2017 at C$1.3202
    * Price of U.S. oil falls 2.7 percent

    By Fergal Smith
    TORONTO, June 15 (Reuters) - The Canadian dollar weakened on
Friday to the lowest in nearly a year against its U.S.
counterpart, as U.S. oil prices tumbled nearly $2 a barrel and
domestic data showed a surprise drop in manufacturing sales.    
    The price of oil, one of Canada's major exports, fell ahead
of an OPEC meeting in Vienna next week. U.S. crude        prices
settled 2.7 percent lower at $65.06 a barrel.             
    "We could see a production hike from Saudi Arabia, which
could take an awful lot of froth out of the oil price and that
is weighing on the Canadian dollar," said Michael Hewson, chief
market analyst at CMC Markets (UK).
    "Disappointing" manufacturing data also pressured the
currency, Hewson said.        
    Canadian manufacturing sales fell 1.3 percent in April from
March as maintenance shutdowns cut output at oil refineries,
Statistics Canada data indicated. Analysts in a Reuters poll had
forecast a 0.6 percent increase.             
    Separate data from the Canadian Real Estate Association
showed that resales of Canadian homes fell in May to the lowest
level in more than five years.             
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.6 percent lower at C$1.3185 to the greenback, or 75.84
U.S. cents. The currency touched its weakest level since June
27, 2017 at C$1.3202.
    For the week, the loonie fell 1.9 percent.
    Global stocks fell as U.S. President Donald Trump said he
was pushing ahead with hefty tariffs on $50 billion of Chinese
imports, and the smoldering trade war between the world's two
largest economies showed signs of igniting as Beijing
immediately vowed to respond in kind.             
    Canada runs a current account deficit, so its currency tends
to weaken when risk appetite sours. The country has its own
trade feud with the United States and is also in slow-moving
talks with the U.S. and Mexico to revamp the North American Free
Trade Agreement.
    Still, speculators have cut bearish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
and Reuters calculations showed. As of June 12, net short
positions dipped to 14,988 contracts from 16,039 a week earlier.
    Foreign investment in Canadian securities reached a
five-month high in April as non-residents targeted the bond
market after four straight months of divestment, Statistics
Canada said.             
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 39 Canadian
cents to yield 2.225 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
David Gregorio)
  
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