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CANADA FX DEBT-C$ dips amid NAFTA uncertainty, lower oil prices

Published 2017-01-23, 09:42 a/m
© Reuters.  CANADA FX DEBT-C$ dips amid NAFTA uncertainty, lower oil prices
USD/CAD
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CA10YT=RR
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* Canadian dollar at C$1.3321, or 75.07 U.S. cents

* Bond prices higher across the yield curve

TORONTO, Jan 23 (Reuters) - The Canadian dollar edged lower against its broadly weaker U.S. counterpart on Monday, pressured by an uncertain outlook for NAFTA, lower oil prices and weaker-than-expected domestic data.

U.S. President Donald Trump could sign an executive order as early as Monday intended to renegotiate the North American Free Trade Agreement between the United States, Canada and Mexico, NBC News reported. Bank of Canada warned last week there would be "material consequences" if Trump enacts protectionist policies and left the door open to an interest rate cut.

Canada sends more than 75 percent of its exports to the United States.

Prices of oil, one of Canada's major exports, fell as signs of a strong recovery in U.S. drilling activity outweighed news that Organization of the Petroleum Exporting Countries and non-OPEC producers were on track to meet output reduction goals set in December. O/R

U.S. crude CLc1 prices were down 1.77 percent at $52.28 a barrel.

The pace of Canadian wholesale trade cooled more than expected in November amid declines in the motor vehicle and parts sector, data from Statistics Canada showed. 0.2 percent gain missed economists' forecasts for an increase of 0.5 percent, while volumes were down 0.1 percent. The soft figures came after strong October growth, which was revised up to 1.3 percent from the previously reported 1.1 percent. 9:24 a.m. ET (1424 GMT), the Canadian dollar CAD=D4 was trading at C$1.3321 to the greenback, or 75.07 U.S. cents, slightly weaker than Friday's close of C$1.3315, or 75.10 U.S. cents.

The currency's strongest level of the session was C$1.3268, while its weakest was C$1.3333. On Friday, the loonie touched its weakest in more than two weeks at C$1.3388.

Losses for the loonie came even as the U.S. dollar .DXY fell to a 1-1/2 month low against an index of the world's other top currencies. speculators have trimmed bearish bets on the Canadian dollar, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Net short Canadian dollar positions fell to 5,456 contracts as of Jan. 17 from 7,935 a week earlier. government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 2 Canadian cents to yield 0.763 percent and the 10-year CA10YT=RR rising 17 Canadian cents to yield 1.730 percent.

The 10-year yield fell 1.7 basis points further below its U.S. equivalent to a spread of -73.4 basis points, as Canadian government bonds outperformed.

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