February 20, 2018 / 2:36 PM / 6 months ago

CANADA FX DEBT-C$ hits near 1-week low on soft December data

    * Canadian dollar at C$1.2604, or 79.34 U.S. cents
    * Canadian wholesale trade falls 0.5 percent in December
    * Bond prices lower across the yield curve
    * Canada-U.S. 2-year spread posts its widest since June 26

    By Fergal Smith
    TORONTO, Feb 20 (Reuters) - The Canadian dollar weakened to
a nearly one-week low against its U.S. counterpart on Tuesday as
the greenback broadly rose and following domestic data that
showed an unexpected drop in December wholesale trade.    
    Canadian wholesale trade fell 0.5 percent due to lower sales
in the personal and household goods sector, Statistics Canada
said. Analysts surveyed by Reuters had forecast a 0.4 percent
increase.             
    The data "bodes poorly" for growth in the economy in
December, Ryan Brecht, a senior economist at Action Economics,
said in a research note.
    On Friday, data showed that Canadian manufacturing shipments
also declined in December.
    The U.S. dollar        climbed on Tuesday against a basket
of major currencies, continuing a rebound from a sharp decline
in recent weeks that took it to three-year lows.             
    At 9:19 a.m. EST (1419 GMT), the Canadian dollar         
was trading 0.4 percent lower at C$1.2604 to the greenback, or
79.34 U.S. cents.
    The currency's strongest level of the session was C$1.2558,
while it touched its weakest since Feb. 14 at C$1.2629.        
    Global stocks fell as Wall Street returned from a long
holiday weekend, pressured by a rise in bond yields.
            
    Lower equity markets tend to weigh on commodity-linked
currencies, such as the Canadian dollar.
    Reduced supply from Canada to the United States caused by
pipeline reductions helped boost U.S. crude oil prices. U.S.
crude        prices were up 0.2 percent at $61.81 a barrel.
                
    Canadian government bond prices were lower across the yield
curve in sympathy with U.S. Treasuries. The two-year           
dipped 2 Canadian cents to yield 1.834 percent and the 10-year
            declined 14 Canadian cents to yield 2.337 percent.
    Canadian and U.S. bond markets were closed on Monday for
holidays.
    The gap between Canada's 2-year yield and its U.S.
equivalent widened by 3.1 basis points to a spread of -39.7
basis points, its widest since June 26.    
    Canada's retail sales report for December is due on Thursday
and the country's January inflation report is due on Friday.

 (Reporting by Fergal Smith; Editing by Bernadette Baum)
  
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