November 5, 2018 / 2:32 PM / 9 days ago

CANADA FX DEBT-C$ rises as Poloz welcomes recent financial market signals

    * Canadian dollar rises 0.3 percent against greenback
    * Price of U.S. oil rises 0.4 percent
    * Canadian bond prices trade mixed across flatter yield
curve

    TORONTO, Nov 5 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Monday, as oil prices rose and
Bank of Canada Governor Stephen Poloz pushed back against
critics who complain that economic forecasts from the central
bank are too optimistic.
    Market volatility, a stronger U.S. dollar and higher yields
for long-term bonds are signs that markets are becoming more
normal, rather than an indication of trouble, Poloz said in a
speech to a business audience in London.             
    Data on Friday showed the Canadian economy added jobs in
October and the unemployment rate dipped to a 40-year low,
underpinning expectations that the central bank would keep
raising interest rates.             
    Still, Canada's productivity and credit growth face a threat
from a flattening yield curve that makes it less appealing to
invest in long-term projects, lesser still if the Bank of Canada
meets its goal of a 3 percent interest rate.             
    The price of oil, one of Canada's major exports, rose as
U.S. sanctions against Iran's fuel exports began. U.S. crude
       prices were up 0.4 percent at $63.42 a barrel.
            
    At 9:08 a.m. (1408 GMT), the Canadian dollar          was
trading 0.3 percent higher at 1.3076 to the greenback, or 76.48
U.S. cents. The currency traded in a narrow range of 1.3078 to
1.3112.
    Speculators have raised bearish bets on the Canadian dollar
for the first time in six weeks, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed on
Friday. As of Oct. 30, net short positions had increased to
9,655 contracts from 7,228 a week earlier.                     
     The U.S. dollar        was little changed ahead of crucial
U.S. midterm elections and a Federal Reserve meeting this week.
              
    Canadian government bond prices were mixed across a flatter
yield curve, with the two-year            flat to yield 2.35
percent and the 10-year             rising 6 Canadian cents to
yield 2.527 percent.

 (Reporting by Fergal Smith; Editing by David Gregorio)
  
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