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CANADA FX DEBT-C$ strengthens to two-week high as oil prices jump
May 15, 2017 / 2:00 PM / 7 months ago

CANADA FX DEBT-C$ strengthens to two-week high as oil prices jump

    * Canadian dollar at C$1.3626, or 73.39 U.S. cents
    * Loonie hits strongest level since April 27 at C$1.3601
    * Bond prices lower across yield curve

    TORONTO, May 15 (Reuters) - The Canadian dollar strengthened
on Monday to more than a two-week high against its U.S.
counterpart as the price of oil, one of Canada's major exports,
jumped after major producers took a step toward extending a
supply-cut deal.
    U.S. crude        prices were up 3.57 percent at $49.55 a
barrel after top exporter Saudi Arabia and Russia said supply
cuts led by the Organization of the Petroleum Exporting needed
to last into 2018, longer than originally agreed.             
    The Canadian dollar's historically close link to oil has
become stronger in recent weeks. The three-month rolling
correlation between the loonie and oil reached 0.75, its highest
since September.    
    The loonie's gains came after Bank of Canada Governor
Stephen Poloz told the Globe and Mail over the weekend that
problems at alternative lender Home Capital Group are contained
but that the sharp rise in Canadian home prices and its possible
impact on the financial system is a primary concern for the
central bank.             
    Investor worries about how the troubles of Home Capital
could affect the country's real estate market have weighed
recently on the Canadian dollar.             
    Resales of Canadian homes fell 1.7 percent in April from
record highs in March as new listings spiked, the Canadian Real
Estate Association said in a report on Monday that suggested a
long-awaited slowdown in housing has begun.             
    At 9:23 a.m. ET (1323 GMT), the Canadian dollar          was
trading at C$1.3626 to the greenback, or 73.39 U.S. cents, up
0.6 percent, according to Reuters data.
    The currency's weakest level of the session was C$1.3720. It
touched its strongest level since April 27 at C$1.3601.
    Earlier this month, the loonie hit its weakest level in 14
months at C$1.3793, pressured by depressed oil prices and a more
uncertain trade outlook with the United States. 
    Speculators have ramped up bearish bets on the Canadian
dollar to the highest levels seen since 1995, data from the
Commodity Futures Trading Commission and Reuters calculations
showed on Friday. Canadian dollar net short positions surged to
86,215 contracts as of May 9 from 47,704 a week earlier.
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 2 Canadian cents to
yield 0.691 percent and the 10-year             falling 11
Canadian cents to yield 1.586 percent.      

 (Reporting by Fergal Smith; Editing by Paul Simao)
  
 

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