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5 months ago
CANADA FX DEBT-C$ posts 1-week high as Trump downplays changes to trade ties
February 13, 2017 / 10:01 PM / 5 months ago

CANADA FX DEBT-C$ posts 1-week high as Trump downplays changes to trade ties

3 Min Read

(Adds analyst quote and details on meeting between Trudeau and
Trump and updates prices)
    * Canadian dollar ends at C$1.3075, or 76.48 U.S. cents
    * Loonie touches its strongest since Feb. 6 at C$1.3055
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, Feb 13 (Reuters) - The Canadian dollar strengthened
to a one-week high against its U.S. counterpart on Monday as
U.S. President Donald Trump downplayed potential changes to
trade ties between the United States and Canada.
    Trump, who held a joint news conference with Canadian Prime
Minister Justin Trudeau, said the United States will be
"tweaking" its trade relationship with Canada, unlike its trade
ties with Mexico, where it faces a more severe situation.
 
    Canada may have most to lose if a proposed renegotiation of
the North American Free Trade Agreement (NAFTA) weakens trade
between Canada and the United States.
    Spending by Americans affects one-fifth of Canada's economy,
while spending by Canadians affects less than 3 percent of U.S.
gross domestic product, BMO Capital Markets said in a research
note.
    The U.S. dollar rose against a basket of major
currencies as investors focused again on the U.S. reflation
trade and braced for testimony by Federal Reserve chief Janet
Yellen this week. 
    "The key event this week will be whether or not Yellen
signals a March rate hike, and if she doesn't, there is a very
good chance that dollar-CAD could break below the C$1.30 mark,"
said Bipan Rai, senior macro strategist at CIBC Capital Markets.
    Gains for the loonie came even as U.S. crude prices
settled 93 cents lower at $52.93 a barrel, pressured by a
stronger greenback and signs of rising U.S. crude output.
 Oil is one of Canada's major exports.
    The Canadian dollar ended at C$1.3075 to the
greenback, or 76.48 U.S. cents, slightly stronger than Friday's
close of C$1.3085, or 76.42 U.S.
    The currency's weakest level of the session was C$1.3121,
while it touched its strongest since Feb. 6 at C$1.3055.
    The loonie weakened 0.4 percent last week after having
posted a recent four-month high of C$1.2969. Some of last week's
losses were pared after data on Friday showed a surge in
domestic jobs.
    Also on Friday, data from the Commodity Futures Trading
Commission and Reuters calculations showed that speculators
increased bullish bets on the Canadian dollar. Canadian dollar
net long positions rose to 8,550 contracts as of Feb. 7 from
3,472 a week earlier.  
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries ahead of Yellen's
testimony. The two-year dipped 3 Canadian cents to
yield 0.786 percent and the 10-year declined 28
Canadian cents to yield 1.729 percent.

 (Reporting by Fergal Smith; Editing by Nick Zieminski and
Jonathan Oatis)

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