August 21, 2018 / 8:22 PM / in 3 months

CANADA FX DEBT-C$ rally loses momentum as wholesale trade falls

 (New throughout)
    * Canadian dollar at C$1.3043, or 76.67 U.S. cents
    * Canadian wholesale trade falls 0.8 percent in June
    * Price of U.S. oil rises 1.4 percent
    * Canadian government bond prices dip across steeper yield
curve

    By Fergal Smith
    TORONTO, Aug 21 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Tuesday, pulling back
from its strongest intraday level in nearly two weeks, as
softer-than-expected domestic data offset higher oil prices and
broad declines for the greenback.
    At 3:43 p.m. (1943 GMT), the Canadian dollar          was
trading near flat at C$1.3043 to the greenback, or 76.67 U.S.
cents.
    The loonie, which was boosted on Friday by hot inflation
data, touched its strongest level intraday since Aug. 9 at
C$1.3015. But it underperformed other G10 currencies, with the
exception of the safe-haven Japanese yen.
    "The American dollar is getting beaten up today and the
Canadian dollar is not taking advantage, unlike some others,"
said Adam Button, a currency analyst at ForexLive.
    The U.S. dollar        fell against a basket of major
currencies after U.S. President Donald Trump criticized the head
of the Federal Reserve for raising interest rates.             
    The price of oil, one of Canada's major exports, rose to its
highest in a week ahead of a forecast drawdown in U.S. crude
inventories. U.S. crude oil futures        settled 1.4 percent
higher at $67.35 a barrel.             
    Underperformance by the loonie against its G10 peers came as
data showed that 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.
Economists in a Reuters poll had forecast a 0.8 percent rise.
            
    "The weakness in autos speaks to fears about tariffs and
NAFTA, and it shows it (trade uncertainty) spilling over into
the real economy," Button said. 
    U.S. and Mexican trade ministers were set to resume talks
over the North American Free Trade Agreement in Washington in a
final push for a deal on autos that would open the door for
Canada to return to negotiations this week.                 
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries. The 10-year
            fell 9 Canadian cents to yield 2.262 percent.
    Domestic retail sales data for June is due on Wednesday,
which could help guide expectations for further interest rate
hikes from the Bank of Canada.           

 (Reporting by Fergal Smith; Editing by Frances Kerry and Peter
Cooney)
  
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