November 18, 2019 / 10:10 PM / 19 days ago

CANADA FX DEBT-C$ posts 10-day high as investors weigh content of Trump-Powell meeting

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie touches a 10-day high at 1.3200
    * Price of U.S. oil declines 1.2%
    * Canada-U.S. 10-year spread narrows by 2.5 basis points

    By Fergal Smith
    TORONTO, Nov 18 (Reuters) - The Canadian dollar rose to a
10-day high against the greenback on Monday as investors bet
that a meeting between U.S. President Donald Trump and Federal
Reserve Chair Jerome Powell could increase prospects for U.S.
interest rate cuts.
    At 4:25 p.m. (2125 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3205 to the greenback, or 75.73 U.S.
cents. The currency touched its strongest intraday level since
Nov. 8 at 1.3200.    
    "There are all kinds of rumors flying about the unscheduled
meeting between Powell and Trump," said Adam Button, chief
currency analyst at ForexLive. "Virtually any way you look at
that meeting, it's dovish and a negative for the U.S. dollar."
    While the Fed sets policy independent of the White House,
investors worried that Trump either urged Powell to cut interest
rates further or told Powell something, such as information on
U.S. trade talks with China, that could make Powell think about
easing, Button said. The Fed said the two met on Monday morning
"to discuss the economy, growth, employment and inflation."
            
    Trump has frequently criticized the Fed for setting interest
rates too high. The U.S. central bank has cut rates three times
this year - in part to offset what it views as damage done by
the Trump administration's trade war with China.
    The U.S. dollar        fell against a basket of major
currencies and U.S. Treasury yields declined.
                        
    Uncertainty over a U.S-China trade deal weighed on the price
of oil, one of Canada's major exports. U.S. crude oil futures
       settled 1.2% lower at $57.05 a barrel.             
    Canada's inflation report for October is due on Wednesday
and September retail sales data is due on Friday, both of which
could help guide expectations for Bank of Canada interest rate
cuts.
    Bank of Canada Senior Deputy Governor Carolyn Wilkins will
speak on Tuesday on safeguarding the Canadian financial system,
while Governor Stephen Poloz is due to speak on Thursday on
economic change.
    Money markets see chances of the central bank cutting
interest rates next month at less than 20%.            
    Canada's 10-year bond             declined 3 Canadian cents
to yield 1.485%. The gap between the 10-year yield and its U.S.
equivalent narrowed by 2.5 basis points to a spread of 32.7
basis points in favor of the U.S. bond.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and Peter
Cooney)
  
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