July 22, 2019 / 1:45 PM / 4 months ago

CANADA FX DEBT-Loonie edges lower as wholesale trade data disappoints

    * Canadian dollar dips 0.1% against the greenback
    * Canadian wholesale trade decreases by 1.8% in May
    * Price of U.S. oil increases 0.5%
    * Canadian bond prices rise across the yield curve

    TORONTO, July 22 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Monday, retreating from a near
nine-month high at the end of last week, as domestic data showed
a surprise drop in May wholesale trade.    
     Canadian wholesale trade decreased by 1.8% from April on
weaker sales in the motor vehicle and motor vehicle parts and
accessories subsector as well as the miscellaneous subsector,
Statistics Canada said. Analysts had forecast a 0.5% increase.
            
    It was the second domestic economic report in as many
trading days that was weaker than expected. On Friday, data
showed a surprise decline in May retail sales.
    Nonetheless, Canada's economy has showed signs of picking up
in the second quarter after a slowdown at the turn of the year,
even as a more uncertain outlook for trade has weighed on the
global economy.         
    At 9:26 a.m. (1326 GMT), the Canadian dollar          was
trading 0.1% lower at 1.3083 to the greenback, or 76.44 U.S.
cents. The currency, which on Friday notched its strongest
intraday level since Oct. 25 at 1.3016, traded in a range of
1.3041 to 1.3095.
    Foreign exchange investors were waiting to see by how much
and how fast policymakers might ease policy, beginning with the
European Central Bank on Thursday.             
    Earlier this month, the Bank of Canada made clear it had no
intention of easing monetary policy as it left its benchmark
interest rate on hold at 1.75%.             
    Speculators have raised bullish bets on the currency to the
highest since March 2018, data from the U.S. Commodity Futures
Trading Commission and Reuters calculations showed on Friday. As
of July 16, net long positions in the loonie rose to 20,964
contracts from 9,226 contracts in the prior week.
    Meanwhile, the price of oil, one of Canada's major exports
was supported on Monday by concerns that Iran's seizure of a
British tanker last week may lead to supply disruptions in the
energy-rich Gulf. U.S. crude oil futures        were up 0.5% at
$55.90 a barrel.                 
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 6.5 Canadian cents to
yield 1.431% and the 10-year             rising 39 Canadian
cents to yield 1.468%.
    The gap between Canada's 2-year yield and its U.S.
counterpart widened by 2.2 basis points to a spread of 37.5
basis points in favor of the U.S. bond, its biggest gap since
June 18.

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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