April 15, 2019 / 8:19 PM / in 7 days

CANADA FX DEBT-C$ slides as rate cut bets climb on weaker business sentiment

 (Adds strategist comment and details throughout; updates
prices)
    * Canadian dollar falls 0.4% against the greenback
    * BoC survey shows business sentiment turning negative
    * Canadian home sales increase 0.9% month-over-month in
March
    * Price of U.S. oil falls 0.8%
    * Canadian government bond prices rise across yield curve

    By Fergal Smith
    TORONTO, April 15 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Monday, as domestic data showing
softer business sentiment triggered increased bets on a Bank of
Canada interest rate cut this year.
    Canada's weak energy sector, a housing slowdown and global
trade tensions are weighing on business sentiment, which has
turned slightly negative, according to a Bank of Canada
quarterly survey.             
    The weaker survey "strongly suggests the BoC will be on hold
through the rest of this year, though the risks are tilted
toward a cut, should a negative shock hit," Benjamin Reitzes,
Canadian rates & macro strategist at BMO Capital Markets, said 
in a note.
    Chances of a rate cut by December doubled to about 40% after
the data, the overnight index swaps market indicated.           
    Adding to headwinds for the loonie, the price of oil, one of
Canada's major exports, fell after Russia's finance minister
said Russia and OPEC may decide to boost production to fight for
market share with the United States, where output remains at
record highs.             
    U.S. crude oil futures        settled 0.8% lower at $63.40 a
barrel.
    At 3:44 p.m. (1944 GMT), the Canadian dollar          was
trading 0.4% lower at 1.3372 to the greenback, or 74.78 U.S.
cents. The currency, which rose 0.5% last week, traded in a
range of 1.3298 to 1.3390.
    Canadian home sales rose 0.9% month-over-month in March,
edging higher after a sharp drop in the previous month, the
Canadian Real Estate Association said on Monday.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 6.5 Canadian cents to
yield 1.603% and the 10-year             rising 28 Canadian
cents to yield 1.750%.
    The gap between Canada's two-year yield and its U.S.
equivalent widened by 2.6 basis points to a spread of 78.6 basis
points in favor of the U.S. bond.

 (Reporting by Fergal Smith; Editing by Susan Thomas and Peter
Cooney)
  
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