July 28, 2020 / 7:21 PM / 16 days ago

CANADA FX DEBT-Canadian dollar's advance stalls as oil prices decline

 (Adds strategist quotes and details throughout; updates prices)
    * Canadian dollar trades near flat against the greenback
    * Loonie touches its strongest intraday since June 10 at
1.3331   
 
    * Price of U.S. oil declines 1.4%
    * Canada's 10-year yield eases 4.8 basis points to 0.475%

    By Fergal Smith
    TORONTO, July 28 (Reuters) - The Canadian dollar was little
changed against its U.S. counterpart on Tuesday, pulling back
from an earlier near seven-week high as oil prices fell and data
showed climbing domestic coronavirus infections.
    Canada's chief public health officer warned that Canadians
could face tighter health restrictions again as COVID-19 case
numbers creep higher, particularly in the West. Canada's
seven-day rolling average of newly reported cases has ticked up
again after falling to a low in early July.             
    The price of oil, one of Canada's major exports, fell as
U.S. lawmakers prepared to wrangle over an economic stimulus
package and investors worried about a rise in coronavirus cases
worldwide. U.S. crude oil futures        settled 1.4% lower at
$41.04 a barrel             
    The U.S. dollar index bounced off a two-year low, but looked
primed for further weakness as the United States continued to
see a rise in coronavirus cases, while the Federal Reserve is
expected to maintain very loose monetary policies.             
    "Most of the gains over the last month for Canada has been
due to U.S. dollar weakness," said Mark Chandler, head of
Canadian fixed income and currency strategy at RBC Capital
Markets. "The U.S. struggles with COVID has helped us (the
Canadian dollar) on a relative basis."
    The loonie        was trading nearly unchanged at 1.3360 to
the U.S. dollar, or 74.85 U.S. cents. The currency, which has
benefited in recent weeks from signs of global economic
recovery, touched its strongest intraday level since June 10 at
1.3331.     
    Canadian government bond yields were lower across much of a
flatter curve along with lower Treasury yields. The 10-year
            was down 4.8 basis points at 0.475%.
    Canada's GDP report for May is due on Friday. It is expected
to show some recovery in the economy after a sharp contraction
in April.

 (Reporting by Fergal Smith; Editing by Andrea Ricci and Grant
McCool)
  
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