October 10, 2019 / 8:00 PM / 11 days ago

CANADA FX DEBT-Canadian dollar climbs to one-week high on trade deal optimism

 (Adds dealer quotes and details throughout, updates prices)
    * Canadian dollar rises 0.3% against the greenback
    * Loonie notches an 8-day high intraday at 1.3269
    * Price of U.S. oil increases 1.8%
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Oct 10 (Reuters) - The Canadian dollar strengthened
to a one-week high against its U.S. counterpart on Thursday,
clawing back its earlier decline, as investors grew optimistic
that top-level trade talks between the United States and China
would yield at least a partial deal.
    U.S. stocks rose after President Donald Trump tweeted he
would meet Chinese Vice Premier Liu He on Friday for further
trade talks.             
    "Some positive talks and potential outcomes always brings
about a risk-on bias," said Darren Richardson, chief operating
officer at Richardson International Currency Exchange Inc. "That
always helps the Canadian dollar and oil strengthen across the
board."
    Canada is more dependent on trade than some other countries,
such as the United States. At C$1.5 trillion, trade of goods and
services, including exports of oil, accounted for 66% of
Canada's economy in 2018, according to government data.
    Oil prices rose, buoyed by comments by the head of OPEC that
the organization could take action to balance oil markets and
that it will decide in December on supply for next year. U.S.
crude oil futures        settled 1.8% higher at $53.55 a barrel.
            
    The U.S. dollar        fell to two-week lows, with
safe-haven demand for the currency waning as investors grew
optimistic about a U.S.-China trade deal as well as a potential
agreement on Britain's exit from the European Union.
            
    At 3:34 p.m. Eastern time (1934 GMT), the Canadian dollar
         was trading 0.3% higher at 1.3292 to the greenback, or
75.23 U.S. cents. The currency touched its strongest intraday
level since Oct. 2 at 1.3269, while its weakest was a one-week
low at 1.3346.
    The gain for the loonie came as data from Statistics Canada
showed new home prices rose 0.1% in August, the first increase
since July 2018.             
    Canada's employment report for September is due on Friday,
which can help guide expectations for the Bank of Canada policy
outlook.
    Robust job gains this year have supported the central bank's
decision to leave its benchmark interest rate on hold at 1.75%
even as some of its peers, including the U.S. Federal Reserve
and the European Central Bank, have reduced borrowing costs.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 10.5 Canadian cents to yield 1.534% and the
10-year             was down 81 Canadian cents to yield 1.397%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Chris Reese)
  
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