September 25, 2017 / 9:07 PM / a month ago

CANADA FX DEBT-C$ weakens as investors position ahead of Poloz speech

    * Canadian dollar at C$1.2381, or 80.77 U.S. cents
    * Bond prices higher across the yield curve
    * Bank of Canada Governor Poloz to speak on Wednesday

    By Solarina Ho
    TORONTO, Sept 25 (Reuters) - The Canadian dollar weakened on
Monday against a broadly stronger U.S. dollar as investors
positioned themselves ahead of a busy week that includes a
speech by Bank of Canada Governor Stephen Poloz on Wednesday and
a slew of speeches by U.S. Federal Reserve officials.
    The retreat came even as prices of oil, a key Canadian
export, rose to their highest for more than two years.
            
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.2381 to the greenback, or 80.77 U.S. cents, down
0.3 percent.
    "This week is jam-packed," said Brad Schruder, director of
director of corporate sales and structuring at BMO Capital
Markets, pointing to events including a parade of Fed speakers,
economic data and North American Free Trade talks. "A little bit
of position squaring makes sense ahead of these risks."
    The currency traded in a range of C$1.2314 to C$1.2385.
    It fell 1.2 percent against the U.S. dollar last week after
a Bank of Canada policymaker said the currency's strength would
be a factor in future interest rate decisions.
    All eyes are now on Poloz's speech on Wednesday, with the
market expecting him to keep the dollar in check without opening
himself to charges from global peers that he is manipulating the
currency.             
    Traders are looking at their positions and saying "it's
better to pare risk now than to try and do it in a potential
storm mid-week," Schruder said.
    The Canadian dollar has climbed 9 percent this year.
    In the United States, a debate within the Fed over the
outlook for U.S. inflation burst into public view, with one
central banker saying inflation weakness is fading and another
suggesting he is nervous it won't.             
    Officials from the United States, Mexico and Canada are in
Ottawa for the third of seven planned rounds of talks, though no
major development is expected this week. The U.S. delegation has
yet to unveil its precise position on several points, prompting
concerns the process to update the 1994 pact could drag on
beyond the scheduled end-December finish.             
    Canadian government bond prices were higher across the yield
curve, with the two-year            up 2 Canadian cents to yield
1.595 percent and the 10-year             up 17 Canadian cents
to yield 2.092 percent.
    The gap between Canada's 10-year yield and its U.S.
equivalent narrowed to a spread of -13.0 basis points.

 (Reporting by Fergal Smith and Solarina Ho; Editing by
Bernadette Baum and James Dalgleish)
  
 

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