July 13, 2018 / 7:49 PM / 4 months ago

CANADA FX DEBT-C$ steadies; down 0.6 pct on week despite BoC rate hike

 (Adds strategist quotes, details on activity; updates prices)
    * Canadian dollar at C$1.3159, or 75.99 U.S. cents
    * Loonie falls 0.6 percent for the week
    * Price of U.S. oil rises nearly 1 percent
    * Bond prices higher across the yield curve

    By Fergal Smith
    TORONTO, July 13 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Friday as oil prices
rose, but for the week the loonie was on track to fall 0.6
percent after broader gains for the greenback offset a Bank of
Canada interest rate hike.
    At 3:30 p.m. EDT (1930 GMT), the Canadian dollar         
was trading near unchanged at C$1.3159 to the greenback, or
75.99 U.S. cents.    
    The U.S. dollar        faded from a two-week peak which was
tied to news of a record Chinese trade surplus that may fuel
U.S.-China trade tensions and that briefly spurred safe-haven
bids for the greenback.             
    "The U.S. dollar had its run earlier in the week," said Mark
McCormick, North American head of FX Strategy at TD Securities.
"I think markets now are consolidating a bit, volumes are
probably a little bit lower, people are probably taking some
positions off."
    Canada exports many commodities, including oil, and runs a
current account deficit, so its economy could be hurt if the
flow of trade or capital slows.
    The country has its own trade dispute with the United States
and is also in slow-moving talks to revamp the North American
Free Trade Agreement (NAFTA).
    Still, the Bank of Canada raised interest rates on Wednesday
for the fourth time since July 2017. The central bank is hoping
higher oil prices can cushion the impact global trade tension
has on exports and investment.             
    U.S. crude oil futures        settled nearly 1 percent
higher at $71.01 a barrel.    
    Speculators have raised bearish bets on the Canadian dollar
to the most since June 2017, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of July 10, net short positions had increased to 52,887
contracts from 49,448 a week earlier.
    Italy will not ratify the European Union's free trade
agreement with Canada, Deputy Prime Minister Luigi Di Maio said
on Friday, although Canadian officials played down the threat to
the accord, which mostly took effect last year.             
    Canadian exporters are diversifying international operations
and are more optimistic about the near-term outlook, Export
Development Canada's Mid-Year Trade Confidence Index showed.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The 10-year            
gained 11 Canadian cents to yield 2.138 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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