January 23, 2020 / 3:06 PM / a month ago

CANADA FX DEBT-Canadian dollar hits one-month low as oil prices slide

    * Canadian dollar falls 0.2% against the greenback
    * Price of U.S. oil decreases 2.8%
    * Canada's 10-year yield hits a two-month low at 1.402%

    TORONTO, Jan 23 (Reuters) - The Canadian dollar weakened to
a one-month low against its U.S. counterpart on Thursday as the
coronavirus outbreak weighed on oil prices, with the loonie
adding to its decline since the Bank of Canada opened the door
to lower interest rates.
    The price of oil, one of Canada's major exports, fell on
concern that the spread of a respiratory virus from China could
lower fuel demand if it stunts economic growth in an echo of the
SARS epidemic nearly 20 years ago. U.S. crude oil futures       
were down 2.8% at $55.16 a barrel.                 
    On Wednesday, the Bank of Canada left its benchmark interest
rate on hold at 1.75% as expected but said a future cut was
possible should a recent slowdown in domestic growth persist.
             
    Money markets now see a greater-than 50% chance of a rate
cut by April, up from about 20% before the rate decision. 
          
    At 9:41 a.m. EST (1441 GMT), the Canadian dollar         
was trading 0.2% lower at 1.3159 to the greenback, or 75.99 U.S.
cents. The currency hit its weakest intraday level since Dec. 23
at 1.3171.
    The loonie has fallen 1.3% since the start of the year after
climbing 5% in 2019, when it was the top-performing G10
currency.        
    Canada's retail sales report for November is due on Friday,
which could be closely watched by investors after the October
data showed the biggest monthly decline in nearly one year.
    Canadian government bond prices were higher across the yield
curve in sympathy with U.S. Treasuries. The two-year           
rose 7.6 Canadian cents to yield 1.509% and the 10-year
            was up 44 Canadian cents to yield 1.402%.
    The 10-year yield hit its lowest intraday level since Nov.
20 at 1.402%. 

 (Reporting by Fergal Smith; editing by Jonathan Oatis)
  
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