May 1, 2018 / 8:45 PM / 5 months ago

CANADA FX DEBT-C$ rises off 4-week low on Poloz confidence

 (Adds strategist quotes, details on activity; updates prices)
    * Canadian dollar at C$1.2860, or 77.76 U.S. cents
    * Loonie touches its weakest since April 3 at C$1.2914
    * Canadian economy grows 0.4 percent in February
    * Bond prices lower across the yield curve

    By Fergal Smith
    TORONTO, May 1 (Reuters) - The Canadian dollar fell to a
four-week low against its U.S. counterpart on Tuesday before
paring its decline, as Bank of Canada Governor Stephen Poloz
said the outlook for the domestic economy is good despite the
overhang of high household debt.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.1 percent lower at C$1.2860 to the greenback, or 77.76
U.S. cents.
    The currency touched its weakest level since April 3 at
C$1.2914 as the U.S. dollar        climbed to a nearly
four-month high against a basket of major currencies.
            
    Poloz said there is good reason to believe the central bank
can manage the risks of Canada's high household debt, even as he
signaled that interest rate hikes will continue, increasing the
cost of that debt.             
    Canada's economy grew 0.4 percent in February, Statistics
Canada said, a sign that first-quarter growth could be stronger
than the Bank of Canada is predicting.             
    "The CAD is outperforming on the crosses and that is a
reflection of somewhat better data and oil prices ticking up
again," said Shaun Osborne, chief currency strategist at
Scotiabank.
    The loonie touched its strongest against the euro since Feb.
9 at C$1.5396.    
    U.S. crude oil futures        settled 1.9 percent lower at
$67.25 a barrel. Still, oil has climbed about 16 percent since
February.
    Canada will push for a permanent exemption from U.S. steel
and aluminum tariffs but the U.S. administration's decision to
postpone them is a "step forward," Canadian Foreign Minister
Chrystia Freeland said.             
    Canadian government bond prices were lower across the yield
curve, with the two-year            down 8 Canadian cents to
yield 1.935 percent and the 10-year             falling 34
Canadian cents to yield 2.347 percent.

 (Reporting by Fergal Smith; editing by Jonathan Oatis and James
Dalgleish)
  
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