May 15, 2020 / 7:35 PM / 22 days ago

CANADA FX DEBT-Loonie extends weekly decline as trade uncertainty weighs on sentiment

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar weakens 0.4% against the greenback
    * For the week, the loonie was down 1.4%
    * Canadian home sales plunge 56.8% in April
    * Canadian bond yields rise across the curve

    By Fergal Smith
    TORONTO, May 15 (Reuters) - The Canadian dollar added to
this week's decline against its U.S. counterpart on Friday as
worries rose that trade tensions between the United States and
China could ramp up and domestic data showed a record plunge in
home sales.    
    U.S. stocks fluctuated as the Trump administration moved to
block shipments of semiconductors to China's Huawei Technologies
from global chipmakers. A renewed Sino-U.S. trade war could
worsen the economic downturn caused by the coronavirus outbreak.
            
    Declines on Wall Street in recent days have been a headwind
for the Canadian dollar, said Erik Nelson, a currency strategist
at Wells Fargo in New York.
    "We're in a market now where liquidity is so thin" that
trading flows can move a currency more than would be expected,
Nelson said.
    Canadian home sales tumbled by 56.8% in April from the
previous month as lockdowns to help contain the coronavirus
pandemic pushed buyers and sellers to the sidelines, the
Canadian Real Estate Association (CREA) said.             
    The Canadian dollar          was trading 0.4% lower at
1.4102 to the greenback, or 70.91 U.S. cents. The currency,
which was down 1.4% for the week, traded in a range of 1.4019 to
1.4117.
    Ottawa has been rolling out fiscal measures to help cushion
the economic impact of the coronavirus crisis on Canadians. On
Friday, Prime Minister Justin Trudeau said that an emergency
wage subsidy program would be extended by three months to the
end of August to help firms retain employees.                   
 
    Canadian investors divested a record-breaking C$42.2 billion
in foreign securities in March amid heightened market volatility
caused by the coronavirus pandemic, Statistics Canada data
showed.             
    U.S. crude oil futures        settled 6.89% higher at $29.43
a barrel on signs that demand was picking up, with China
reporting increased refinery runs and rounding out a week of
bullish news on the supply front. Oil is one of Canada's major
exports.                
    Canadian government bond yields rose across the curve, with
the 10-year             up 1.5 basis points at 0.542%.
    Canadian financial markets will be closed on Monday for the
Victoria Day holiday.

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Grant
McCool)
  
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