June 12, 2018 / 8:54 PM / 6 months ago

CANADA FX DEBT-C$ weakens as buyers sit tight ahead of Fed decision

 (Adds strategist quotes and details on activity; updates
prices)
    * Canadian dollar at C$1.3018, or 76.82 U.S. cents
    * Price of U.S. oil rises 0.4 percent
    * Bond prices mixed across the yield curve

    By Fergal Smith
    TORONTO, June 12 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Tuesday as potential buyers of
the currency held off in the hope of seeing cheaper levels after
a Federal Reserve interest rate decision on Wednesday.
    At 4 p.m. EDT (2000 GMT), the Canadian dollar          was
trading 0.3 percent lower at C$1.3018 to the greenback, or 76.82
U.S. cents. The currency traded in a range of C$1.2977 to
C$1.3030.
    Last week, the loonie touched its weakest in 2-1/2 months at
C$1.3068.
    "Those who would be buyers of CAD seem like they have
shifted their entry points higher, at a minimum just sitting
back and waiting for the Fed," said Greg Anderson, global head
of foreign exchange strategy at BMO Capital Markets in New York.
"So the market is just feeling its way higher." 
    The currency has been pressured this week by a trade feud
between U.S. President Donald Trump and Canadian Prime Minister
Justin Trudeau.             
    Just days after blowing up a G7 summit Trudeau had hosted,
Trump took another dig at him, saying the United States had a
big trade deficit with Canada and that "a little balance" was
needed.
    An increase in trading volume after the Fed decision could
allow investors who were looking for a weaker Canadian dollar
after the G7 to take a position, Anderson said.
    The U.S. president's comments come amid slow-moving talks
between Canada, the United States and Mexico to modernize the
North American Free Trade Agreement. Canada sends about 75
percent of its exports to the United States and its economy
could be hurt if NAFTA were scrapped.    
    U.S. crude oil futures        settled 0.4 percent higher at
$66.36 a barrel. Oil is one of Canada's major exports.    
    Canadian government bond prices were mixed across the yield
curve, outperforming U.S. Treasuries after data for May showed
the biggest advance in U.S. consumer prices in more than six
years.             
    The 10-year             rose 7 Canadian cents to yield 2.298
percent.

 (Reporting by Fergal Smith; Editing by Bernadette Baum and Tom
Brown)
  
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