March 9, 2018 / 10:00 PM / 14 days ago

CANADA FX DEBT-Canadian dollar notches 1-week high as oil, stocks rally

 (Adds portfolio manager quotes and details on market activity
throughout; updates prices)
    * Canadian dollar at C$1.2816, or 78.03 U.S. cents
    * Loonie touches its strongest since March 1 at C$1.2815    
    * Bond prices lower across the yield curve
    * 10-year yield touches its highest since Feb. 28

    By Fergal Smith
    TORONTO, March 9 (Reuters) - The Canadian dollar
strengthened to a more than one-week high against its U.S.
counterpart on Friday, boosted by higher oil prices and improved
risk appetite, while domestic data showed a weaker-than-expected
jobs gain in March.
    The price of oil, one of Canada's major exports, rebounded
from two days of declines as Wall Street climbed on strong U.S.
jobs data, while investors also grew hopeful that a planned
meeting between U.S. President Donald Trump and North Korea's
Kim Jong Un could ease geopolitical tensions.             
    U.S. crude oil futures        settled 3.2 percent higher at
$62.04 a barrel.
    "With the risk-on trade today, with North Koreans coming to
the negotiating table ... we have our currency doing better,"
said Hosen Marjaee, senior managing director, Canadian fixed
income at Manulife Asset Management.
    The Canadian economy added 15,400 jobs in February after a
big loss in January, but full-time positions shrank and wage
growth decelerated, prompting analysts to predict the Bank of
Canada will be in no rush to raise interest rates.             
    The central bank has raised benchmark interest rate three
times since July to 1.25 percent but money markets don't expect
another rate hike until the summer.           
    In separate domestic data, capacity utilization rose to 86.0
percent in the fourth quarter, above predictions for a rate of
85.2 percent and the highest since the second quarter of 2007.
    At 4 p.m. EST (2100 GMT), the Canadian dollar          was
trading 0.6 percent higher at C$1.2816 to the greenback, or
78.03 U.S. cents.
    The currency touched its strongest level since March 1 at
C$1.2815. For the week, the loonie gained 0.5 percent.
    Gains for the loonie came after Trump said on Thursday that
Canada and Mexico would be exempt from tariffs on steel and
aluminum as long as talks to update the North American Free
Trade Agreement progressed.
    Still, speculators cut bullish bets on the Canadian dollar
for the fourth straight week, data from the U.S. Commodity
Futures Trading Commission and Reuters calculations showed. As
of March 6, net long positions had fallen to 19,565 contracts
from 22,220 a week earlier.
    Canadian government bond prices were lower across the yield
curve, with the 10-year             falling 34 Canadian cents to
yield 2.271 percent. The yield touched its highest intraday
since Feb. 28 at 2.274 percent.

 (Additional reporting by Nichola Saminather; editing by
Jonathan Oatis and James Dalgleish)
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