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CANADA FX DEBT-C$ edges higher as oil prices climb
February 27, 2017 / 3:02 PM / 9 months ago

CANADA FX DEBT-C$ edges higher as oil prices climb

    * Canadian dollar at C$1.3088, or 76.41 U.S. cents
    * Bond prices lower across the yield curve

    TORONTO, Feb 27 (Reuters) - The Canadian dollar edged higher
against its U.S. counterpart on Monday as oil prices rose, but
gains for the loonie were restrained ahead of a Bank of Canada
interest rate decision this week.
    U.S. crude        prices were up 0.93 percent to $54.49 a
barrel as investors showed confidence in prices rising further,
though gains were capped by the prospect of faster growth in
U.S. oil production.      
    Oil is one of Canada's major exports.
    The Bank of Canada is widely expected to hold interest rates
at 0.50 percent on Wednesday.
    In January, its governor, Stephen Poloz, said that an
interest rate cut remains on the table depending on risks,
including "material consequences" if U.S. President Donald Trump
enacts protectionist policies.
    Trump's address to Congress is due on Tuesday. He is
expected to unveil some elements of his plans to cut taxes.
    A border adjustment tax is part of a tax reform blueprint
proposed by House Republicans. The loonie would be among the
biggest losers if it is implemented, analysts say.             
    At 9:28 a.m. ET (1428 GMT), the Canadian dollar          was
trading at C$1.3088 to the greenback, or 76.41 U.S. cents,
slightly stronger than Friday's close of C$1.3101, or 76.33 U.S.
    The currency's strongest level of the session was C$1.3085,
while its weakest level was C$1.3123.
    On Friday, the loonie notched a one-week high at C$1.3057
after data showed a spike in domestic inflation.
    Speculators increased bullish bets on the Canadian dollar to
the most since May, data from the Commodity Futures Trading
Commission and Reuters calculations showed on Friday. Canadian
dollar net long positions rose to 24,584 contracts as of Feb. 21
from 19,340 a week earlier.             
    Canadian government bond prices were slightly lower across
the yield curve in sympathy with U.S. Treasuries, with the
two-year            price down 0.5 Canadian cent to yield 0.749
percent and the benchmark 10-year             falling 8 Canadian
cents to yield 1.616 percent.
    On Friday, the 10-year yield touched its lowest in more than
two months at 1.599 percent. 

 (Reporting by Fergal Smith Editing by W Simon)

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