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Canadian dollar dips as investors weigh global trade uncertainty

Published 2019-02-19, 10:11 a/m
© Reuters.  Canadian dollar dips as investors weigh global trade uncertainty
USD/CAD
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CL
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CA2YT=RR
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CA10YT=RR
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* Canadian dollar falls 0.2 percent against the greenback

* Price of U.S. oil rises 0.4 percent

* Canadian bond prices edge up across the yield curve

TORONTO, Feb 19 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Tuesday as an uncertain outlook for global trade offset the lift from the highest crude oil prices in nearly three months.

A new round of talks between the United States and China to resolve their trade war will take place in Washington on Tuesday, with follow-up sessions at a higher level later in the week, the White House said. a confidential U.S. Commerce Department report sent to U.S. President Donald Trump over the weekend was widely expected to clear the way for him to threaten tariffs of up to 25 percent on imported autos and auto parts by designating the imports a national security threat.

Canada would be largely spared from auto tariffs under the new U.S.-Mexico-Canada Agreement on trade. Canada is running a current account deficit and is a major producer of commodities, including oil, so its economy could be hurt if the global flow of trade or capital slows.

U.S. crude oil futures CLc1 rose to their highest since Nov. 20 last year, up 0.40 percent at $55.81 a barrel, boosted by lower supplies. 9:45 a.m. (1445 GMT), the Canadian dollar CAD=D4 was trading 0.2 percent lower at 1.3271 to the greenback, or 75.35 U.S. cents. The currency traded in a range of 1.3235 to 1.3281.

The loonie was little changed on Monday, when Canada's stock and bond markets were closed for the Family Day holiday. Last week, the loonie rose 0.3 percent.

Data last Friday from the U.S. Commodity Futures Trading Commission and Reuters calculations showed that speculators cut their bearish bets on the Canadian dollar.

As of Jan. 22, net short positions had fallen to 56,096 contracts from 59,524 in the prior week. Earlier in January net short positions were at their highest since June 2017, at 66,002 contracts.

Canadian government bond prices were higher across the yield curve, with the two-year CA2YT=RR up 1 Canadian cent to yield 1.772 percent and the 10-year CA10YT=RR rising 8 Canadian cents to yield 1.885 percent.

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