November 9, 2018 / 9:20 PM / 9 days ago

CANADA FX DEBT-C$ nears 4-month low on oil price fall, pipeline setback

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar falls 0.4 percent against the greenback
    * Price of U.S. oil drops for 10th straight day
    * Loonie touches its weakest since July 20 at 1.3233
    * Canadian bond prices rise across a flatter yield curve

    By Fergal Smith
    TORONTO, Nov 9 (Reuters) - The Canadian dollar weakened to a
nearly four-month low against the greenback on Friday as oil
prices extended recent declines and a court ruling threatened to
delay construction of a pipeline carrying heavy crude from
Canada to the United States.
    The price of oil, one of Canada's major exports, fell for
the 10th straight day, the longest losing streak since July
1984, as global supply increased and investors worried that oil
demand growth could slow.             
    U.S. crude oil futures        settled 0.8 percent lower at
$60.19 a barrel.
    "The drop in oil is a kick in the teeth for the Canadian
dollar," said Adam Button, chief currency analyst at ForexLive.
"The Canadian dollar was able to withstand the pain in oil for
most of the last month but oil is down 22 percent now."
    A U.S. judge in Montana late on Thursday halted construction
of the Keystone XL pipeline, throwing another obstacle in the
path of the project that has been in development for a decade.
            
    "The Keystone ruling can seriously derail the expected
recovery next year in Canadian oil," Button said.  
    Still, speculators have cut bearish bets on the Canadian
dollar to the lowest since March, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of Nov. 6, net short positions had decreased to 2,632 contracts
from 9,655 a week earlier.
    At 4:02 p.m. (2102 GMT), the Canadian dollar          was
trading 0.4 percent lower at 1.3205 to the greenback, or 75.73
U.S. cents. The currency touched its weakest level since July 20
at 1.3233.
    For the week, the loonie was down 0.7 percent.
    The loonie fell on Friday as weak Chinese data raised
concerns about global growth, pressuring stocks on Wall Street.
            
    Canada runs a current account deficit, so its economy could
be hurt if the flow of trade or capital slows.
    The U.S. dollar rose toward a 16-month high against the euro
as falling equity prices spurred a flight to quality and the
U.S. Federal Reserve reaffirmed its monetary tightening stance.
            
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The 10-year
            rose 25.5 Canadian cents to yield 2.507 percent.

 (Reporting by Fergal Smith
Editing by Susan Thomas and Richard Chang)
  
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