August 21, 2018 / 1:26 PM / in 3 months

CANADA FX DEBT-C$ edges to near 2-week high as oil climbs, greenback retreats

    * Canadian dollar at C$1.3031, or 76.74 U.S. cents
    * Canadian wholesale trade falls 0.8 percent in June
    * Price of U.S. oil rises 1.5 percent
    * Bond prices lower across steeper yield curve

    By Fergal Smith
    TORONTO, Aug 21 (Reuters) - The Canadian dollar strengthened
to a nearly two-week high against its U.S. counterpart on
Tuesday, as higher oil prices and a broad decline for the
greenback offset domestic data showing a surprise drop in June
wholesale trade.    
    Canadian wholesale trade decreased by 0.8 percent in June
from May, the second decline in three months, led by weaker
sales in the motor vehicles and parts subsector, Statistics
Canada said. Economists in a Reuters poll had forecast a 0.8
percent rise.            
    The data could weigh on prospects for further strength in
Canada's economy after an expected acceleration in second
quarter growth.
    "It is a sign that momentum might be tailing off to end the
quarter," Royce Mendes, a senior economist at CIBC Capital
Markets, said in a research note.    
    The price of oil, one of Canada's major exports, was boosted
by the prospect of lower oil supply from Iran due to U.S.
sanctions. U.S. crude        prices were up 1.5 percent at $67.4
a barrel.              
     The U.S. dollar        weakened against a basket of major
currencies after U.S. President Donald Trump criticized the head
of the Federal Reserve for raising interest rates.             
    At 8:58 a.m. EDT (1258 GMT), the Canadian dollar         
was trading 0.1 percent higher at C$1.3031 to the greenback, or
76.74 U.S. cents.
    The currency, which was boosted on Friday by domestic data
showing the highest level of inflation in nearly seven years,
touched its strongest since August 9 at C$1.3015.
    Canadian retail sales data for June is due on Wednesday,
which could help guide expectations for further interest rate
hikes from the Bank of Canada.           
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The two-year
           fell 0.5 Canadian cents to yield 2.104 percent and
the 10-year             declined 12 Canadian cents to yield
2.266 percent.

 (Reporting by Fergal Smith
Editing by Frances Kerry)
  
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