February 11, 2019 / 4:16 PM / 8 months ago

CANADA FX DEBT-C$ dips as U.S.-China trade talks concerns weigh on oil

    * Canadian dollar falls 0.2 percent against the U.S. dollar
    * Price of U.S. oil declines 2.3 percent
    * Canadian bond prices fall across the yield curve

    TORONTO, Feb 11 (Reuters) - The Canadian dollar weakened
against its broadly stronger U.S. counterpart on Monday as oil
prices fell and investors weighed prospects for trade talks this
week between the United States and China.
    The U.S. dollar        rose as concerns grew that U.S.-China
talks would not heal a rift over trade between the world's
largest economies.       
    Canada is a major producer of commodities, including oil, so
its economy could be hurt by an uncertain outlook for global
trade.
    The price of oil fell as an uptick in U.S. drilling, a
shutdown caused by a fire at a major U.S. refinery and concerns
about U.S.-China trade talks all overshadowed support from
OPEC-led supply restraint.      
    U.S. crude        prices were down 2.3 percent at $51.5 a
barrel.
    At 10:45 a.m. EST (1545 GMT), the Canadian dollar         
was trading 0.2 percent lower at 1.3306 to the greenback, or
75.15 U.S. cents. The currency traded in a range of 1.3261 to
1.3314.
    On Friday, much stronger-than-expected domestic jobs data
helped the loonie rebound from its weakest intraday in two weeks
at 1.3329. But the currency still lost ground last week,
declining 1.4 percent.             
    Data last Friday from the U.S. Commodity Futures Trading
Commission and Reuters calculations showed that speculators last
month raised their bearish bets on the Canadian dollar to the
highest since June 2017.             
    As of Jan. 8, net short positions had jumped to 66,002
contracts from 50,649 at the end of December.
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
fell 5.5 Canadian cents to yield 1.8 percent and the 10-year
            declined 30 Canadian cents to yield 1.916 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed by 1.4 basis points to a spread of 73.7
basis points in favor of the U.S. bond.

 (Reporting by Fergal Smith, editing by G Crosse)
  
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