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CANADA FX DEBT-C$ recovers ahead of GDP data as oil rallies
October 30, 2017 / 8:50 PM / 18 days ago

CANADA FX DEBT-C$ recovers ahead of GDP data as oil rallies

 (Adds analyst quotes and details throughout; updates prices)
    * Canadian dollar at C$1.2822, or 77.99 U.S. cents
    * Domestic GDP data for August is due on Tuesday
    * Bond prices higher across a flatter yield curve
    * 10-year yield touches a 7-week low at 1.956 percent

    By Fergal Smith
    TORONTO, Oct 30 (Reuters) - The Canadian dollar clawed back
most of its losses against the greenback on Monday, as oil rose
and investors braced for top-tier domestic data and a U.S.
Federal Reserve interest rate decision later in the week.
    The loonie has fallen nearly 6 percent since notching a
two-year high at C$1.2063 in September, pressured by a more
dovish tone from the Bank of Canada.
    The central bank, which raised interest rates in July and
September, left its policy rate at 1 percent last week and
cooled expectations for another hike this year.
    But the currency has found some support after hitting on
Friday a more than three-month low at C$1.2916.    
    "What's holding the Canadian dollar in check here right now
are commodities," said Jeff Scott, senior currency strategist at
OFX.
    U.S. crude        futures closed at a peak not seen since
February, settling 0.5 percent higher at $54.15 a barrel, on
expectations that Organization of the Petroleum Exporting
Countries-led production cuts would be extended beyond March.
            
    Oil is one of Canada's major exports.
    A dearth of fundamental drivers until later in the week is
also helping the loonie stabilize, Scott said.
    Canada's gross domestic product data for August is set for
release on Tuesday, while the October employment report and
trade data for September are due on Friday. The U.S. Federal
Reserve will make an interest rate decision on Wednesday. 
    At 4 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2822 to the greenback, or 77.99 U.S. cents, down
0.1 percent.
    It traded in a range of C$1.2812 to C$1.2861.
    Negotiations over a deal to update the North American Free
Trade Agreement have included some "troubling proposals" from
the United States, Canadian Foreign Minister Chrystia Freeland
said.             
    The U.S. dollar fell against a basket of major currencies as
investors grew cautious on news that President Donald Trump's
former campaign manager faces charges of conspiracy against the
United States.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries, as investors
weighed news reports indicating that Trump is likely to appoint
Fed Governor Jerome Powell, who is viewed as more dovish than
other contenders, as head of the Fed.
    The two-year            rose 4 Canadian cents to yield 1.405
percent and the 10-year             climbed 26 Canadian cents to
yield 1.956 percent, its lowest since Sept. 8.

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

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