October 15, 2019 / 8:59 PM / a month ago

CANADA FX DEBT-Loonie gets tailwind from rising Brexit deal hopes

 (New throughout, updates prices, market activity and adds
dealer comments)
    * Canadian dollar rises 0.3% against the greenback
    * IMF leaves its Canadian 2019 growth forecast unchanged at
1.5%
    * Price of U.S. oil decreases 1.5%
    * Canada's 10-year yield touches a four-week high at 1.577%

    By Fergal Smith
    TORONTO, Oct 15 (Reuters) - The Canadian dollar strengthened
against its U.S. counterpart on Tuesday, with investors
encouraged by signs of progress between Britain and the European
Union to reach an amicable divorce deal.
    Stocks in Europe and on Wall Street jumped on strong U.S.
corporate results and a possible deal to avoid a disorderly
Brexit.             
    On Friday, U.S. President Donald Trump said China and the
United States had reached the first phase of a trade deal, which
was also supportive of stocks.
    Canada is a major exporter of commodities, including oil,
and runs a current account deficit, so its economy could benefit
from a pick-up in the global flow of trade or capital.
    "This move today I would say is the loonie benefiting from
positive global tailwinds," said Brad Schruder, director of
corporate sales and structuring at BMO Capital Markets. "There
is a chance we see some more CAD appreciation pending tomorrow's
inflation data out of Canada."
    Canada's inflation report for September, due on Wednesday,
could help guide expectations for the Bank of Canada policy
outlook. The central bank, which has left interest rates on hold
this year even as some of its major peers have eased, is due to
make its next rate decision on Oct. 30.
    At 4:23 p.m. (2023 GMT), the Canadian dollar          was
trading 0.3% higher at 1.3200 to the greenback, or 75.76 U.S.
cents.
    The currency, which last Friday notched a one-month high at
1.3171 after data showing a much bigger-than-expected domestic
jobs gain, traded in a range of 1.3196 to 1.3238.             
    Oil prices fell as investors worried that the unrelenting
U.S.-China trade war would keep squeezing the global economy,
and that swelling U.S. crude inventories would further pressure
prices. U.S. crude oil futures settled 1.5% lower at $52.81 a
barrel.             
    The International Monetary Fund cut its global growth
forecast for 2019 to 3%, its lowest level since the global
financial crisis, but its projection for Canada was unchanged
from its previous forecast in July at 1.5%.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 7 Canadian cents to
yield 1.693% and the 10-year             falling 40 Canadian
cents to yield 1.562%.    
    The 10-year yield touched its highest intraday level since
July 17 at 1.577%.

 (Reporting by Fergal Smith; Editing by David Gregorio)
  
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