July 18, 2019 / 8:43 PM / 4 months ago

CANADA FX DEBT-C$ rebounds from one-week low as bets rise on Fed rate cut

 (Adds dealer quote and details throughout, updates prices)
    * Canadian dollar rises 0.1% against the greenback
    * Loonie hits an eight-day low intraday at 1.3096
    * Canadian home prices rise 0.8% in June from May
    * Canada's 10-year yield hits a near two-week low at 1.495%

    By Levent Uslu
    TORONTO, July 18 (Reuters) - The Canadian dollar edged
higher against its U.S. counterpart on Thursday, with the
currency recovering from an earlier eight-day low as the
greenback was pressured by heightened bets that the Federal
Reserve would lower interest rates at the end of July.
    At 4:13 p.m. EDT (2013 GMT), the Canadian dollar         
was trading 0.1% higher at 1.3037 to the greenback, or 76.70
U.S. cents. The currency's strongest level of the session was
1.3029, while it touched its weakest since July 10 at 1.3096.
    The U.S. dollar declined against a basket of major
currencies        after New York Federal Reserve President John
Williams said policymakers need to add stimulus early to address
too-low inflation when U.S. interest rates are near zero and
said they cannot wait for economic disaster to unfold.       
    The Fed most often moves rates in 25-basis-point increments,
but some market players expect the central bank to cut by as
much as 50 basis points later this month.
    "If the Fed goes by 50, I think you see USD-CAD break below
the bottom end of the range that it has been in, which would see
it down below 1.30," said Scott Lampard, head of global markets
at HSBC Bank Canada.
    The loonie notched last Friday a near nine-month high at
1.3018, boosted by expected divergence in policy between the
Bank of Canada and the Fed. Canada's central bank last week made
clear it had no intention of easing rates.
    Meanwhile, Canadian home prices rose 0.8% in June from the
prior month, thanks to a seasonal boost, but the increase was
lower than the month's 21-year average, data showed.
            
    A separate report from ADP, a human resources solutions
company, showed that Canada added 30,400 jobs in June, as hiring
rebounded after a sharp decline in May.             
    Canada's retail sales report for May is due on Friday.
    The price of oil, one of Canada's major exports, was
pressured by expectations that crude output would rise in the
Gulf of Mexico following last week's hurricane in the region.
U.S. crude oil futures        settled 2.6% lower at $55.30 a
barrel.      
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 6.3 Canadian cents to
yield 1.453% and the 10-year             rising 29 Canadian
cents to yield 1.497%.
    The 10-year yield touched its lowest intraday since July 5
at 1.495%.

 (Reporting by Levent Uslu, additional reporting by Fergal
Smith; editing by G Crosse)
  
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