CANADA FX DEBT-C$ posts 1-week high as Trump downplays changes to trade ties

Published 2017-02-13, 04:56 p/m
© Reuters.  CANADA FX DEBT-C$ posts 1-week high as Trump downplays changes to trade ties
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(Adds analyst quote and details on meeting between Trudeau and Trump and updates prices)

* Canadian dollar ends at C$1.3075, or 76.48 U.S. cents

* Loonie touches its strongest since Feb. 6 at C$1.3055

* Bond prices lower across the yield curve

By Fergal Smith

TORONTO, Feb 13 (Reuters) - The Canadian dollar strengthened to a one-week high against its U.S. counterpart on Monday as U.S. President Donald Trump downplayed potential changes to trade ties between the United States and Canada.

Trump, who held a joint news conference with Canadian Prime Minister Justin Trudeau, said the United States will be "tweaking" its trade relationship with Canada, unlike its trade ties with Mexico, where it faces a more severe situation. may have most to lose if a proposed renegotiation of the North American Free Trade Agreement (NAFTA) weakens trade between Canada and the United States.

Spending by Americans affects one-fifth of Canada's economy, while spending by Canadians affects less than 3 percent of U.S. gross domestic product, BMO Capital Markets said in a research note.

The U.S. dollar .DXY rose against a basket of major currencies as investors focused again on the U.S. reflation trade and braced for testimony by Federal Reserve chief Janet Yellen this week. key event this week will be whether or not Yellen signals a March rate hike, and if she doesn't, there is a very good chance that dollar-CAD could break below the C$1.30 mark," said Bipan Rai, senior macro strategist at CIBC Capital Markets.

Gains for the loonie came even as U.S. crude CLc1 prices settled 93 cents lower at $52.93 a barrel, pressured by a stronger greenback and signs of rising U.S. crude output. Oil is one of Canada's major exports.

The Canadian dollar CAD=D4 ended at C$1.3075 to the greenback, or 76.48 U.S. cents, slightly stronger than Friday's close of C$1.3085, or 76.42 U.S.

The currency's weakest level of the session was C$1.3121, while it touched its strongest since Feb. 6 at C$1.3055.

The loonie weakened 0.4 percent last week after having posted a recent four-month high of C$1.2969. Some of last week's losses were pared after data on Friday showed a surge in domestic jobs.

Also on Friday, data from the Commodity Futures Trading Commission and Reuters calculations showed that speculators increased bullish bets on the Canadian dollar. Canadian dollar net long positions rose to 8,550 contracts as of Feb. 7 from 3,472 a week earlier. government bond prices were lower across the yield curve in sympathy with U.S. Treasuries ahead of Yellen's testimony. The two-year CA2YT=RR dipped 3 Canadian cents to yield 0.786 percent and the 10-year CA10YT=RR declined 28 Canadian cents to yield 1.729 percent.

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