October 28, 2019 / 2:18 PM / 18 days ago

CANADA FX DEBT-Loonie adds to recent gains as bullish bets reach 20-month high

    * Canadian dollar rises 0.1% against the greenback
    * Loonie touches its strongest since July 22 at 1.3050
    * Price of U.S. oil increases 0.3%
    * Canadian bond prices fall across a steeper yield curve

    TORONTO, Oct 28 (Reuters) - The Canadian dollar strengthened
to its highest in more than three months against the greenback
on Monday after investors boosted bullish bets on the currency
and ahead of an interest rate decision this week from the Bank
of Canada.
    Net long positions in the loonie climbed to 33,393 contracts
as of Oct. 22 from 12,961 in the prior week, data from the U.S.
Commodity Futures Trading Commission and Reuters calculations
showed on Friday. That was the highest level of bullish bets
since February 2018.
    Canada's economy has added jobs at a robust pace in recent
months and inflation has stayed close to the Bank of Canada's 2%
target. The central bank is expected to leave its benchmark
interest rate unchanged at 1.75% on Wednesday and through the
rest of the year, a Reuters poll showed.             
    The Bank of Canada has been on hold this year even as major
central banks such as the U.S. Federal Reserve and the European
Central Bank have eased.
    The Fed is expected to cut rates on Wednesday for the third
time since July. That could lower the range for the Fed's
benchmark rate below the Bank of Canada's equivalent rate for
the first time since December 2016.
    At 9:44 a.m. (1344 GMT), the Canadian dollar          was
trading 0.1% higher at 1.3051 to the greenback, or 76.62 U.S.
cents. The currency, which rose 0.5% last week, touched its
strongest intraday level since July 22 at 1.3050.
    The price of oil, one of Canada's major exports, was
supported by progress in China-U.S. trade talks. U.S. crude
       oil futures were up 0.3% at $56.84 a barrel. 
    The gain for the loonie came as U.S. and Chinese officials
said they were "close to finalizing" some parts of a trade
agreement. Canada is a major exporter of commodities so its
economy could benefit from an improved outlook for global trade.
                   
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 6 Canadian cents to yield 1.692% and the 10-year
            was down 52 Canadian cents to yield 1.595%.

 (Reporting by Fergal Smith; Editing by Steve Orlofsky)
  
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