January 31, 2020 / 9:41 PM / a month ago

CANADA FX DEBT-C$ posts biggest monthly decline since 2018 as virus fears weigh

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar declines 0.2% against the greenback
    * For the month, the loonie weakens 1.8%
    * Canadian GDP rises 0.1% in November
    * Canada's 10-year yield hits a near four-month low at
1.257%

    By Fergal Smith
    TORONTO, Jan 31 (Reuters) - The Canadian dollar fell to a
near eight-week low against the greenback on Friday as rising
concern about the economic impact of the coronavirus pressured
commodity-linked currencies, with the loonie seeing its biggest
monthly loss since December 2018.
    At 3:45 p.m. (2045 GMT), the Canadian dollar          was
trading 0.2% lower at 1.3233 to the greenback, or 75.57 U.S.
cents. The currency touched its weakest intraday level since
Dec. 9 at 1.3253.
    "It's a growth story," said Alvise Marino, a foreign
exchange strategist at Credit Suisse in New York. "People look
and see oil is down, they see copper is down, they see iron ore
is down and therefore they unwind long risk positions."
    The currencies of commodity-producing countries such as
Canada, Australia and New Zealand tend to be more sensitive to
risk appetite and prospects for the global economy than some
other G10 currencies. Both the Australian dollar        and the
New Zealand dollar        fell nearly 0.4%.
    Global equities          fell, while the price of oil
      , one of Canada's major exports, settled 1.1% lower at
$51.66 a barrel. Crude has fallen more-than 20% from this
month's peak.                 
    For January, the loonie was down 1.8%. It follows a 5% gain
in 2019, when the loonie was the top-performing G10 currency.
    Canadian gross domestic product edged up by 0.1% in November
as increases in utilities as a result of a cold weather snap
helped to offset the effects of a rail strike, Statistics Canada
said on Friday. Analysts had forecast no change.             
    "The return to growth in Canada's economy during November
suggests that activity at the end of the year was not quite as
poor as feared," said Ryan Brecht, a senior economist at Action
Economics.
    Last week, the Bank of Canada left the door open to an
interest rate cut should a recent slowdown in domestic growth
persist. Money markets see about a 60% chance that the central
bank will ease by April.                        
    Speculators have cut their bullish bets on the Canadian
dollar, data from the U.S. Commodity Futures Trading Commission
and Reuters calculations showed on Friday. As of Jan. 28, net
long positions had fallen to 34,590 contracts from 38,294 in the
prior week.    
    Canadian government bond yields were lower across the yield
curve, with the 10-year yield             falling 6.5 basis
points to 1.265%. It touched its lowest intraday since Oct. 8 at
1.257%.

 (Reporting by Fergal Smith
Editing by Nick Zieminski and Alistair Bell)
  
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