September 3, 2019 / 2:07 PM / 16 days ago

CANADA FX DEBT-C$ hits 2-1/2-month low ahead of BoC rate decision this week

    * Canadian dollar falls 0.3% against the greenback
    * Loonie touches its weakest since June 19 at 1.3382
    * Price of U.S. oil decreases 3.4%
    * Canadian bond prices rise across the yield curve

    TORONTO, Sept 3 (Reuters) - The Canadian dollar weakened to
a two-and-a-half-month low against its U.S. counterpart on
Tuesday as trade tensions weighed on global equity markets and
investors awaited a Bank of Canada interest rate decision on
Wednesday.
     U.S. stocks fell as Washington's new round of tariffs on
some Chinese goods kicked in and after a report that officials
from both sides were struggling to decide on the schedule for a
meeting this month.                 
    Canada exports many commodities, including oil, so its
economy could be hurt by a slowdown in global trade.
    Data on Tuesday showed that Canadian manufacturing activity
slowed in August as new work received by firms slumped to the
lowest level in nearly four years.             
    Meanwhile, the price of oil was pressured by rising OPEC and
Russian oil output as well as the protracted U.S.-China trade
dispute that has dragged on the global economy. U.S. crude oil
futures        were down 3.4% at $53.21 a barrel.             
    At 9:53 a.m. (1353 GMT), the Canadian dollar          was
trading 0.3% lower at 1.3355 to the greenback, or 74.88 U.S.
cents. The currency, which fell last week for the seventh
straight week, touched its weakest intraday level since June 19
at 1.3382.
    Data on Friday showing that Canada's economy grew much more
than expected in the second quarter has supported expectations
that the Bank of Canada will leave its benchmark interest rate
unchanged at 1.75% at Wednesday's announcement. Still,
economists in a Reuters poll see increased likelihood of a rate
cut by year-end.                         
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 4 Canadian cents to yield
1.332% and the 10-year             rising 17 Canadian cents to
yield 1.146%.
    Last month, the 10-year yield hit its lowest intraday level
since October 2016 at 1.083%.  

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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