March 27, 2018 / 8:35 PM / 6 months ago

CANADA FX DEBT-C$ pulls back from two-week high as stocks stumble

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prices)
    * Canadian dollar at C$1.2892, or 77.57 U.S. cents
    * Loonie touches its strongest since March 12 at C$1.2815
    * Oil prices fall 0.5 percent
    * Bond prices higher across a flatter yield curve

    By Fergal Smith
    TORONTO, March 27 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday, retreating from an
earlier two-week high, as oil and equity prices fell and the
greenback broadly rose.
    U.S. crude oil futures        settled 0.5 percent lower at
$65.25 a barrel, while Wall Street was dragged down by
technology shares as investors weighed discussions between the
United States and China on trade.                  
    "It (the Canadian dollar) has been back and forth, it's
basically trading off equity volatility for the most part," said
David Bradley, director of foreign exchange trading at
Scotiabank.
    Oil is one of Canada's major exports. The country's currency
tends be sensitive to stock market performance due to the signal
it sends about the strength of the global economy.
    The U.S. dollar        rose against a basket of major
currencies as worries about the momentum of the euro zone's
economic expansion weighed on the euro.             
    At 4 p.m. EST (2000 GMT), the Canadian dollar          was
trading 0.4 percent lower at C$1.2892 to the greenback, or 77.57
U.S. cents.    
    The currency's weakest level of the session was C$1.2903,
while it touched its strongest since March 12 at C$1.2815.
    Reduced fears of a global trade war had helped boost
Canada's commodity-linked currency on Monday. The loonie has
also benefited in the last week from optimism about a deal to
revamp the North American Free Trade Agreement and
hotter-than-expected domestic inflation data.
    Canadian government bond prices were higher across a flatter
yield curve, with the two-year            up 9.5 Canadian cents
to yield 1.831 percent and the 10-year             rising 68
Canadian cents to yield 2.146 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent widened by 2.7 basis points to a spread of -63.5
basis points. 
    Canada's gross domestic product data for January is due on
Thursday. 

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Marguerita Choy)
  
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