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CANADA FX DEBT-C$ recovers to trade flat after hitting 1-week low

Published 2017-09-14, 05:08 p/m
© Reuters.  CANADA FX DEBT-C$ recovers to trade flat after hitting 1-week low
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(Adds analyst comment, details; updates prices)

* Canadian dollar at C$1.2185, or 82.07 U.S. cents

* Loonie earlier touched weakest since Sept. 7 at C$1.2240

* Bond prices mixed across flatter yield curve

* 10-year yield hits highest intraday since October 2014

By Alastair Sharp

TORONTO, Sept 14 (Reuters) - The Canadian dollar traded little changed against its U.S. counterpart after paring earlier losses on Thursday, helped by oil price gains as investors sought clues on the relative likelihood of tighter monetary policy.

"The market is trying to get a sense of whether the Bank of Canada is hiking alone or if it will be joined by other central banks, specifically the Bank of England and the Federal Reserve," said Adam Button, a currency analyst at ForexLive in Montreal.

At 4 p.m. ET (2000 GMT), the Canadian dollar CAD=D4 was trading at C$1.2185 to the greenback, or 82.07 U.S. cents, down 0.1 percent.

The loonie has rallied 13 percent against the greenback since early May, boosted by a rapid expansion in the Canadian economy that prompted the Bank of Canada to raise interest rates in July, its first hike in nearly seven years, and again last week.

The central bank's policy rate sits at 1 percent.

The currency's strongest level of the session was C$1.2157, while it touched its weakest since Sept. 7 at C$1.2240 after firmer U.S. inflation data briefly boosted the greenback. prices rose, with Brent closing at a five-month high, after a string of reports forecast the market would tighten further as fuel demand increased. O/R

U.S. West Texas Intermediate crude CLc1 broke above $50 a barrel and settled 1.2 percent higher at $49.89, its highest close since July 31.

Oil is one of Canada's major exports.

"There is some major push and pull in the Canadian dollar at the moment," Forexlive's Button said.

The earlier slip in the Canadian dollar came as a flurry of disappointing data from China suggested the world's second-largest economy is finally starting to lose some momentum as borrowing costs rise. is a major buyer of commodities produced by countries such as Canada.

Canadian new home prices rose 0.4 percent in July from June, slightly exceeding economists' forecasts for a gain of 0.3 percent. Vancouver had strong demand from buyers, while prices in Toronto were unchanged for a second straight month following provincial measures to rein in the market, data from Statistics Canada showed. government bond prices were mixed across a flatter yield curve, with the two-year CA2YT=RR down 2 Canadian cents to yield 1.578 percent and the 10-year CA10YT=RR adding 9 Canadian cents to yield 2.058 percent.

The 10-year yield touched its highest intraday since October 2014 at 2.105 percent before pulling back.

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