November 30, 2018 / 2:24 PM / 17 days ago

CANADA FX DEBT-C$ retreats as oil prices drop, investors eye G20 summit

    * Canadian dollar dips 0.2 percent against the greenback
    * Price of U.S. oil falls 1.3 percent
    * Canada's economy grows at a 2 percent pace in Q3
    * Canadian bond prices rise across a flatter yield curve

    TORONTO, Nov 30 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as oil prices dropped,
while North American leaders signed a new trade pact and
domestic data showed growth in the economy that was in line with
expectations.
    Canada's economy grew at an annualized rate of 2.0 percent
in the third quarter, matching analysts' forecasts, data from
Statistics Canada showed. Growth slowed from 2.9 percent in the
second quarter on lower motor vehicle purchases and falling
housing investment.             
    Some market players were disappointed by the composition of
the data and a contraction in gross domestic product for the
month of September.
    But chances of another Bank of Canada interest rate hike as
soon as January were little changed at 70 percent, the overnight
index swaps market showed.
    The central bank, which has raised interest rates five times
since July 2017, will make an interest rate decision next week,
but is not seen moving rates.
    The leaders of Mexico, Canada and the United States signed a
North American trade pact after brinkmanship over the final
details of the deal continued through the eve of the signing.
            
    The signing of the agreement could reduce uncertainty for
Canada's economy, but that prospect has been offset since
October by a sharp drop in the price of oil, one of Canada's
major exports.
    Oil prices fell further on Friday as swelling inventories
depressed sentiment despite widespread expectations that
Organization of the Petroleum Exporting Countries and Russia
would agree on some form of production cut next week.
            
    U.S. crude        prices were down 1.3 percent at $50.77 a
barrel.
    At 9:05 a.m. (1405 GMT), the Canadian dollar          was
trading 0.2 percent lower at 1.3304 to the greenback, or 75.17
U.S. cents. The currency, which on Wednesday touched a
five-month low at 1.3360, traded in a range of 1.3273 to 1.3331.
    The decline for the loonie came as stocks were pressured by
investor caution ahead of a much-awaited meeting between the
presidents of the United States and China at the G20 Summit,
which could determine the fate of the ongoing trade dispute that
has roiled financial markets.             
    In addition to being a major commodities exporter, Canada
runs a current account deficit, so its economy could be hurt if
the global flow of trade or capital slows.
    Canadian government bond prices were higher across a flatter
yield curve, with the 10-year             rising 23 Canadian
cents to yield 2.277 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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