CANADA FX DEBT-C$ edges higher as greenback selling offsets lower oil

Published 2016-11-03, 05:26 p/m
© Reuters.  CANADA FX DEBT-C$ edges higher as greenback selling offsets lower oil
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(Adds analyst quotes, details on Bank of Canada governor and yield curve, updates prices)

* Canadian dollar ends at C$1.3383, or 74.72 U.S. cents

* Bond prices lower across the yield curve

By Fergal Smith

TORONTO, Nov 3 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as investor selling of the greenback on U.S. election uncertainty offset lower oil prices, but gains for the loonie were restrained ahead of key domestic data on Friday.

The U.S. dollar .DXY fell to a three-week low against a basket of major currencies.

"Investors in the United States are feeling the Donald Trump jitters, without a question of doubt. And I think it manifests itself in money going into (Japanese) yen and swissy (Swiss francs) and even a little bit into CAD (Canadian dollar)," said Adam Button, currency analyst at ForexLive.

"However, the risks for Canada are also huge," Button added.

Republican presidential candidate Donald Trump has said he would renegotiate or scrap the North American Free Trade Agreement if elected, posing a risk to the Canadian economy.

U.S. crude oil futures CLc1 settled 68 cents lower at $44.66 a barrel as investors reeled from a record weekly surge in U.S. crude inventories. Oil is one Canada's major exports. O/R

Canada's employment and trade reports are due on Friday and will be watched closely by investors for clues on the interest rate outlook after the Bank of Canada acknowledged recently it had considered a rate cut at its policy meeting.

The labor market is expected to have shed 10,000 jobs in October after a hefty gain the month before, while the September trade deficit is expected to narrow to C$1.7 billion. ECONCA

The Canadian dollar CAD=D4 ended at C$1.3383 to the greenback, or 74.72 U.S. cents, slightly stronger than Wednesday's close of C$1.3395, or 74.65 U.S. cents.

The currency's strongest level of the session was C$1.3362, while its weakest was C$1.3402.

On Friday, it touched its weakest level in seven months at C$1.3434.

Bank of Canada Governor Stephen Poloz will give remarks on Thursday evening after being inducted to the Oshawa Walk of Fame.

Canadian government bond prices were lower across the yield curve, with the two-year CA2YT=RR price down 0.5 of a Canadian cent to yield 0.548 percent and the benchmark 10-year CA10YT=RR falling 12 Canadian cents to yield 1.198 percent.

The curve steepened as the spread between the 2-year and 10-year yields widened by 1 basis point to 65 basis points, indicating underperformance for longer-dated bonds. The spread touched on Friday its widest in four months at 66 basis points.

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