August 8, 2019 / 7:55 PM / 9 days ago

CANADA FX DEBT-Loonie firms as risk appetite recovers on stronger yuan

 (Adds strategist quotes and details throughout, updates prices)
    * Canadian dollar rises 0.5% against the greenback
    * U.S. crude oil futures increase by 2.8%
    * Bond prices move higher across the yield curve

    By Levent Uslu
    TORONTO, Aug 8 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Thursday, recovering from a
seven-week low it hit the previous day, as the stronger Chinese
currency boosted global risk appetite.
    Risk sentiment stabilized after resilient Chinese trade data
and Beijing's efforts to slow a slide in the value of the yuan
currency encouraged investors to buy riskier currencies.
            
    "Clearly the big driver (for the loonie) is the recovery in
risk appetite," said Mark McCormick, North American head of FX
strategy at TD Securities.
    At 3:31 p.m. (1931 GMT), the Canadian dollar          was
trading 0.5% higher at 1.3233 to the greenback, or 75.57 U.S.
cents. The currency, which touched near its seven-week low on
Wednesday, had been on a losing streak since the beginning of
the week.
    The rise of the loonie came as the price of oil, one of
Canada's major exports, jumped on Thursday on expectations that
falling prices could lead to production cuts, coupled with a
steadying of the yuan after a week of turmoil spurred by an
escalation in U.S.-China trade tensions.             
    "Commodities are a little bit higher, oil's up as well ...
and the Canadian dollar is firming on the back of that,"
McCormick added.
    U.S. crude oil futures        settled 2.8% higher at $52.54
a barrel.
    Meanwhile, new home prices in Canada fell 0.1% in June, for
the second month in a row, domestic data showed. Prices have
been flat or falling since August 2018.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            price up 0.5 Canadian cent
to yield 1.358% and the 10-year             rising 7 Canadian
cents to yield 1.236%.

 (Reporting by Levent Uslu; Editing by Lisa Shumaker)
  
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