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CANADA FX DEBT-C$ slumps to 14-month low after U.S. sets lumber duties
April 25, 2017 / 8:46 PM / in 8 months

CANADA FX DEBT-C$ slumps to 14-month low after U.S. sets lumber duties

 (Adds comment, updates prices)
    * Canadian dollar ends at C$1.3565, or 73.72 U.S. cents
    * Loonie hits a 14-month low at C$1.3626
    * Bond prices lower across the yield curve

    By Alastair Sharp
    TORONTO, April 25 (Reuters) - The Canadian dollar slumped to
a 14-month low against its U.S. counterpart on Tuesday after the
United States said it would impose preliminary anti-subsidy
duties averaging 20 percent on imports of Canadian softwood
lumber.
    The move sets a tense tone as the two countries and Mexico
prepare to renegotiate the 23-year-old North American Free Trade
Agreement.             
    "The Canadian dollar has definitely not reacted well to the
beating of the trade drums," said Brad Schruder, director of
corporate sales and structuring at BMO Capital Markets.
    While he said reaction to the lumber tariff was likely
overdone, the weakness also partly reflected "fear of a snowball
effect."
    "It renews this concern that Canada could be facing some
stiff headwinds on trade negotiations," after being lulled into
a false sense of security from more favorable signals in recent
months. 
    The Canadian dollar          notched its weakest close this
year, settling at C$1.3565 to the greenback, or 73.72 U.S.
cents, compared to Monday's close of C$1.3516, or 73.99 U.S.
cents.
    The currency touched its weakest since Feb. 25, 2016, at
C$1.3626 during the session.
    Recent weakening in the price of oil, one of Canada's major
exports, has added to pressure on the nation's currency amid
doubts about the Organization of the Petroleum Exporting
Countries' ability to reduce global crude inventories. 
    Oil prices edged up in volatile trading, rebounding from six
days of losses, ahead of U.S. crude inventory data forecast to
show a drawdown.      
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 3.5 Canadian cents to yield 0.757 percent, and the 10-year
            declined 28 Canadian cents to yield 1.521 percent.
    Canadian retail sales data for February is due on Wednesday.
        

 (Additional reporting by Fergal Smith; Editing by Lisa Von Ahn
and Chris Reese)
  
 

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