November 6, 2018 / 9:26 PM / in 11 days

CANADA FX DEBT-C$ dips as investors weigh economic impact of U.S vote

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar dips 0.1 percent against greenback
    * Price of U.S. oil falls 1.4 pct
    * Canadian bond prices fall across a steeper yield curve

    By Fergal Smith
    TORONTO, Nov 6 (Reuters) - The Canadian dollar edged lower
against its U.S. counterpart on Tuesday as oil prices declined
and investors weighed the potential impact of the U.S. midterm
congressional elections on North American economies.
    Financial markets were bracing for President Donald Trump's
Republican party to likely losing control of the House of
Representatives, while retaining a majority in the Senate.
            
    "The Canadian dollar is not seen as a good safe-haven
regarding U.S. politics," said Alfonso Esparza, a senior
currency analyst at OANDA. "What happens if the U.S. starts
slowing down, then would that drag (on) Canada? And mostly
certainly it will."
    Canada sends about 75 percent of its exports to the United
States, and its economy has been benefiting from faster U.S.
growth following fiscal stimulus.             
    The price of oil, one of Canada's major exports, fell to an
eight-month low after Washington granted sanction waivers to top
buyers of Iranian oil and as Iran said it has so far been able
to sell as much oil as it needs to.             
    U.S. crude oil futures        settled down 1.4 percent at
$62.21 a barrel.
    At 4:10 p.m. (2110 GMT), the Canadian dollar          was
trading 0.1 percent lower at 1.3126 to the greenback, or 76.18
U.S. cents. The currency traded in a narrow range of 1.3106 to
1.3145.
    The value of Canadian building permits increased by 0.4
percent in September from August, matching analysts' estimates,
data from Statistics Canada showed. Compared to the same month
last year, permit values were down 0.6 percent.             
    The make-up of activity in Canada's economy has been moving
away from housing and consumption toward business investment and
exports, the Bank of Canada said in a quarterly report last
month as it hiked interest rates for a fifth time since July
2017.                 
    Money markets expect another rate hike by January.
          
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries after record
amounts of longer-dated U.S. government debt supply.
    The two-year            fell 2 Canadian cents to yield 2.356
percent and the 10-year             declined 15 Canadian cents
to yield 2.535 percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and
Leslie Adler)
  
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