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CANADA FX DEBT-C$ steadies near 5-week low, BoC rate decision due this week

Published 2018-10-22, 04:28 p/m
© Reuters.  CANADA FX DEBT-C$ steadies near 5-week low, BoC rate decision due this week
USD/CAD
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CL
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CA2YT=RR
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CA10YT=RR
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DXY
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* Canadian dollar near flat against the greenback

* Domestic wholesale trade falls 0.1 percent in August

* Canadian bond prices rise across a flatter yield curve

By Fergal Smith

TORONTO, Oct 22 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday, holding near its weakest level in more than five weeks as the greenback broadly climbed, while a Bank of Canada interest rate decision was due later in the week.

At 3:40 p.m. (1940 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3098 to the greenback, or 76.35 U.S. cents.

The currency, which traded in a range of 1.3080 to 1.3126, remained near Friday's five-week low of 1.3032.

The loonie's recent decline has come amid an escalating trade dispute between the United States and China, European political uncertainty and declines for global equity markets.

"Those things don't play well for some of the more risky currencies, which the CAD would be grouped into," said Blake Jespersen, managing director, foreign exchange sales at BMO Capital Markets.

Canada runs a current account deficit and exports many commodities, including oil, so its economy could be hurt if the global flow of trade or capital slows.

U.S. crude oil futures CLc1 settled 0.1 percent higher at $69.17 a barrel despite Saudi Arabia's pledge to raise crude production to a record high. wholesale trade decreased by 0.1 percent in August from July as weaker sales in the building material and supplies and motor vehicles and parts subsectors led the decline, Statistics Canada reported. Analysts forecast a 0.2 percent increase. inflation and retail sales data last Friday also came in weaker than expected. money markets expect the Bank of Canada to raise its key interest rate this week by 25 basis points to 1.75 percent. It would be the fifth hike since July 2017. BOCWATCH

The U.S. dollar .DXY rose against a basket of major currencies as the British pound fell on news that Brexit negotiations with the European Union over Northern Ireland remained in flux and as the euro continued its slide on political uncertainty over Italy's budget. government bond prices were higher across a flatter yield curve, with the two-year CA2YT=RR up 1.5 Canadian cents to yield 2.292 percent and the 10-year CA10YT=RR rising 14 Canadian cents to yield 2.484 percent.

The gap between Canada's 10-year yield and its U.S. equivalent widened by 1 basis point to a spread of 71.2 basis points in favor of the U.S. bond, its widest since July 24.

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