October 17, 2019 / 8:22 PM / a month ago

CANADA FX DEBT-Loonie notches 11-week high as 'risk-on' boosts commodity currencies

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar rises 0.4% against the greenback
    * Loonie touches its strongest since July 31 at 1.3131
    * Canadian manufacturing sales increase by 0.8% in August
    * Canada's 10-year yield posts a three-month high at 1.608%

    By Fergal Smith
    TORONTO, Oct 17 (Reuters) - The Canadian dollar climbed to
its strongest in more than two months against its U.S.
counterpart on Thursday as investors welcomed an eleventh-hour
Brexit deal and domestic data showed a stronger-than-expected
gain for factory sales in August.
    Global stocks          rose after Britain reached a deal to
avoid a disorderly divorce from the European Union that could
have hurt the global economy.    
    "You can put most of it (the Canadian dollar rally) down to
the general risk-on sentiment that we've seen benefit commodity
currencies," said Mark Chandler, head of Canadian fixed income
and currency strategy at RBC Capital Markets.
    Canada, like Australia and New Zealand, is a major
commodities exporter, so its economy could benefit from an
improved global growth outlook.
    Canadian manufacturing sales increased by 0.8% in August
from July on higher motor vehicle sales, as well as fabricated
metal products, data from Statistics Canada showed. Analysts had
forecast a 0.6% increase.             
    "You can make the case that the global weakness that we've
seen has been slow to seep into both non-energy exports and
manufacturing sales in Canada," Chandler said.
    The Bank of Canada has left its benchmark interest rate on
hold this year at 1.75% even as some of its global peers,
including the Federal Reserve and the European Central Bank,
have eased. Its next rate decision is on Oct. 30.
    Separate data from payroll services provider ADP showed that
Canada added 28,200 jobs in September, building on a blockbuster
increase of 109,900 in an upwardly revised reading for the 
previous month.             
    At 3:54 p.m. (1954 GMT), the Canadian dollar          was
trading 0.4% higher at 1.3142 to the greenback, or 76.09 U.S.
cents. The currency reached its strongest intraday level since
July 31 at 1.3131.
    The gain for the loonie came as U.S. House Speaker Nancy
Pelosi said lawmakers were getting closer to an agreement with
the Trump administration on revisions to the deal negotiated by
the Trump administration with Canada and Mexico.             
    Canada sends about 75% of its exports to the United States,
including oil.
    U.S. crude oil futures        settled 1.1% higher at $53.93
a barrel despite a larger-than-expected rise in U.S. crude
stockpiles.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 2.8 Canadian cents to
yield 1.659% and the 10-year             falling 18 Canadian
cents to yield 1.567%.
    The 10-year yield touched its highest intraday level since
July 16 at 1.608%.

 (Reporting by Fergal Smith
Editing by Chizu Nomiyama and Richard Chang)
  
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