May 12, 2017 / 2:09 PM / 2 months ago

CANADA FX DEBT-C$ dips but stays above 14-month low amid firm oil price

3 Min Read

    * Canadian dollar at C$1.3710, or 72.94 U.S. cents
    * Bond prices higher across a flatter yield curve

    TORONTO, May 12 (Reuters) - The Canadian dollar edged lower
against its broadly weaker U.S. counterpart on Friday, but kept
some distance from a recent 14-month low as prices of oil held
on to this week's gains.
    U.S. crude        prices, which had hit a five-month low one
week ago, edged up 0.17 percent to $47.91 a barrel, helped by
expectations of an extension of OPEC-led output cuts and buoyed
by falling U.S. crude inventories.                  
    Oil is one of Canada's major exports and the currency's
historically close link to the commodity has become stronger in
recent weeks.
    The three-month rolling correlation between the Canadian
dollar and oil reached 0.75, its highest since September,
indicating the currency and commodity move mostly in the same
direction.
    The U.S. dollar        fell against a basket of major
currencies after data showed U.S. retail sales increased
less-than-expected in April.             
    At 9:51 a.m. ET (1351 GMT), the Canadian dollar          was
trading at C$1.3710 to the greenback, or 72.94 U.S. cents, down
0.1 percent, according to Reuters data.
    The currency traded in a range of C$1.3665 to C$1.3742. One
week ago, it had hit its weakest in 14 months at C$1.3793.
    Shares of Canada's biggest non-bank lender Home Capital
Group Inc          fell after the company raised doubts about
its ability to continue as a going concern.
    Investors have been wary about how Home Capital's troubles
could impact the country's red-hot housing market.        
    Canadian home prices rose in April, lifted once again by
hefty price gains in the hot Toronto market which some fear is
becoming overheated.             
    Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The two-year
           rose 2.5 Canadian cents to yield 0.693 percent and
the 10-year             climbed 36 Canadian cents to yield 1.565
percent.
    The gap between the 2-year yield and the 10-year yield
narrowed 2.7 basis points to a spread of 87.2 basis points as
longer-dated bonds outperformed. 

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
 

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