June 27, 2018 / 8:14 PM / 5 months ago

CANADA FX DEBT-C$ slides to 1-year low as Poloz cools July rate hike bets

 (Adds strategist quote and details on activity; updates prices)
    * Canadian dollar at C$1.3370, or 74.79 U.S. cents
    * Price of U.S. oil rises 3.2 percent
    * Chances of July interest rate hike slip to less than 50
percent
    * Bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, June 27 (Reuters) - The Canadian dollar weakened to
a one-year low against its U.S. counterpart on Wednesday after a
speech by Bank of Canada Governor Stephen Poloz reduced bets for
an interest rate hike next month from the central bank.
    The effects of U.S. steel and aluminum tariffs and tighter
mortgage rules will "figure prominently" in the Bank of Canada's
July decision on interest rates, Poloz said.              
    "We have seen a pretty aggressive sell-off in the Canadian
dollar in response to the Poloz speech," said Eric Theoret, a
currency strategist at Scotiabank.
    The market was looking for some clarity on the prospect of
an interest rate hike next month but the speech put the focus on
upcoming domestic data, Theoret said.
    Chances of a rate increase at the July 11 announcement fell
to less than 50 percent from about 55 percent before the speech.
    Canada's gross domestic product data for April and the Bank
of Canada Business Outlook Survey are due on Friday.
    At 3:52 p.m. EDT (1952 GMT), the Canadian dollar         
was trading 0.5 percent lower at C$1.3370 to the greenback, or
74.79 U.S. cents. The currency touched its weakest since June
12, 2017 at C$1.3386.    
    The price of oil, one of Canada's major exports, was
supported by U.S. demands that importers stop buying Iranian
crude from November. U.S. crude        prices settled 3.2
percent higher at $72.76 a barrel.             
    Some of the benefit of higher prices, however, could be lost
for Canada due to a supply outage at the Syncrude oil sands
facility in Alberta, with repairs expected to last at least
through July.             
    U.S. stocks fell on renewed uncertainty regarding the U.S.
stance on Chinese investments in American technology companies.
             
    Canada runs a current account deficit so its economy could
be hurt if the flow of trade or capital slows.
    The country also has its own trade dispute with the United
States and is in slow-moving talks to revamp the North American
Free Trade Agreement.
     Canada's trade minister last week met senior officials from
auto companies in Detroit, as Ottawa takes its lobbying effort
directly to the Big Three carmakers to avert potential U.S. auto
tariffs.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 5 Canadian cents to yield
1.78 percent and the 10-year             rising 34 Canadian
cents to yield 2.067 percent.
    The 10-year yield touched its lowest since Jan. 4 at 2.056
percent.

 (Reporting by Fergal Smith; Editing by Dan Grebler and Lisa
Shumaker)
  
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