February 26, 2019 / 8:33 PM / 7 months ago

CANADA FX DEBT-C$ strengthens as Fed's patience bruises greenback

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar rises 0.2 percent against the greenback
    * Price of U.S. oil rises 2 cents
    * Canadian bond prices rise across the yield curve

    By Fergal Smith
    TORONTO, Feb 26 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Tuesday, reversing an early
decline as oil prices rose and Federal Reserve Chairman Jerome
Powell signaled patience on raising interest rates further.
    The U.S. dollar        fell to a three-week low in choppy
trading as Powell repeated that the U.S. central bank would
remain patient on monetary policy, suggesting that it was
unlikely to raise interest rates anytime soon.             
    "The greenback is down across the board," said Ronald
Simpson, managing director, global currency analysis at Action
Economics. "Oil prices recovered some (ground), so that helps
the loonie as well."
    U.S. crude oil futures        settled 2 cents higher at
$55.50 a barrel on signs that OPEC plans to maintain production
cuts despite pressure from U.S. President Donald Trump, whose
comment criticizing rising crude prices sent the market into a
tailspin a day earlier.             
    Oil is one of Canada's major exports.
    At 3:08 p.m. (2008 GMT), the Canadian dollar          was
trading 0.2 percent higher at 1.3164 to the greenback, or 75.96
U.S. cents. The currency, which on Monday reached its strongest
level in nearly three weeks at 1.3113, traded in a range of
1.3163 to 1.3236.  
    Data from the U.S. Commodity Futures Trading Commission and
Reuters calculations showed that speculators cut their bearish
bets on the Canadian dollar. As of Feb. 12, net short positions
had fallen to 37,537 contracts from 42,037 in the prior week. 
    Over coming days, Canadian markets will watch domestic
economic data that could guide expectations for next week's
interest rate decision by the Bank of Canada. 
    Canada's inflation report for January is due on Wednesday
and fourth-quarter gross domestic product data is due on Friday.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 4.5 Canadian cents to yield 1.759 percent and the 10-year
            climbed 23 Canadian cents to yield 1.868 percent.
    A Bank of Canada working group proposes expanding the range
of transactions used in the calculation of the Canadian
Overnight Repo Rate Average (CORRA) interest-rate benchmark,
according to a consultation paper published by the central bank.
            
    

 (Reporting by Fergal Smith; Editing by David Gregorio and Peter
Cooney)
  
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