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CANADA FX DEBT-C$ reverses gains as oil price slumps on storm concerns
August 28, 2017 / 8:53 PM / a month ago

CANADA FX DEBT-C$ reverses gains as oil price slumps on storm concerns

    * Canadian dollar at C$1.2498 or 80.01 U.S. cents
    * Bond prices mixed across maturity curve

    By Solarina Ho
    TORONTO, Aug 28 (Reuters) - The Canadian dollar fell against
the greenback on Monday, reversing earlier session gains as U.S.
oil prices sank on concerns over refinery shutdowns in the wake
of Tropical Storm Harvey.
    U.S. oil prices were hurt by expectations that inventories
will rise due to Texas refineries getting knocked out by
flooding from Harvey, which was the most powerful hurricane to
hit the state in more than 50 years. Oil is a key Canadian
export.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading at C$1.2498 to the greenback, or 80.01 U.S. cents, down
0.1 percent.
    "Are you going to have a squeeze on production which would
drive oil prices higher, or is this going to be an inventory
issue, which would drive oil prices lower? The market's caught
in between that," said Amo Sahota, director at Klarity FX in San
Francisco.
    Sahota said the market settled on softer oil prices, which
is keeping Canadian dollar strength in check.
    The loonie's retreat came even as the U.S. dollar extended
Friday's losses, after Federal Reserve Janet Yellen failed to
mention U.S. monetary policy at the closely watched Jackson Hole
meeting of central bankers in Wyoming.
    The U.S. currency hit 16-month lows against a basket of
major rivals as worries over how Tropical Storm Harvey might
impact the country's economy added further pressure.       
    The Canadian dollar, which had strengthened more than 2
percent in the last two weeks, traded between C$1.2445 and
C$1.2503.
    Canadian second-quarter growth data, due on Thursday, will
be the next key datapoint for investors looking for direction.
    The market has mostly priced in a second rate hike from the
Bank of Canada this fall amid a string of robust domestic
economic data, with most betting on a hike in October.
    Canadian government bond prices were mixed across the
maturity curve. The two-year            price was up 0.5
Canadian cent to yield 1.265 percent and the benchmark 10-year
            rose 6 Canadian cents to yield 1.867 percent.
    The Canada-U.S. two-year bond spread was -6.4 basis points,
while the 10-year spread was -28.9 basis points.

 (Reporting by Solarina Ho, editing by G Crosse)
  
 

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