July 23, 2020 / 8:10 PM / 16 days ago

CANADA FX DEBT-C$ rises as uncertain U.S. economic outlook drags U.S. dollar lower

    * Canadian dollar at C$1.3407 or 74.59 U.S. cents
    * Bond prices mixed across the maturity curve

 (New throughout, updates prices, market activity and analyst
    By Saqib Iqbal Ahmed
    July 23 (Reuters) - The Canadian dollar notched a fourth
straight day of gains against its U.S. counterpart on Thursday,
as an unexpected rise in U.S. weekly jobless claims raised
worries about the outlook for the U.S. economy, leaving few
takers for the U.S. dollar.
    The Canadian dollar        was at C$1.3407 to the greenback,
or 74.59 U.S. cents, stronger than Wednesday's close of
C$1.3416, or 74.54 U.S. cents. The loonie touched a 6-week high
of 1.3352 to the dollar, earlier in the session.
    The number of Americans filing for unemployment benefits
rose last week for the first time in nearly four months,
suggesting the U.S. labor market was stalling amid a resurgence
in new COVID-19 cases and depressed demand.             
    "This morning’s snapback in jobless claims helped reinforce
the perception that U.S. growth is set to slip relative to the
euro area and other major economies, and traders are setting up
for a wider-than-previously-expected divergence between U.S. and
European PMIs tomorrow," said Karl Schamotta, chief market
strategist at Cambridge Global Payments in Toronto.
    Preliminary estimates of July purchasing manager's index
(PMI) for the European Union and the United States is expected
to be released on Friday.
    The U.S. dollar was about 0.2% lower against the euro
    "As a high-beta currency, the Canadian dollar is simply
along for the ride," Schamotta said.
    The loonie, which has been supported in recent sessions by
rising oil prices, came under some pressure earlier in the
session as oil prices retreated on concerns about rising U.S.
oil inventories and surging coronavirus cases.             
    On Thursday, Canadian government bond prices were mixed
across the  maturity curve. The two-year            yield was at
0.285% up from 0.272% late on Wednesday, while the benchmark
Canadian 10-year             yield slipped to 0.506% from
Wednesday's 0.51%.

 (Reporting by Saqib Iqbal Ahmed; editing by Jonathan Oatis and
David Gregorio)
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