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CANADA FX DEBT-C$ weakens as BoC says currency will help shape level of stimulus

Published 2020-09-10, 04:07 p/m
© Reuters.
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(Adds strategist quotes and details throughout, updates prices)

* Canadian dollar falls 0.4% against the greenback

* Loonie trades in a range of 1.3118 to 1.3202

* Price of U.S. oil settles nearly 2% lower

* Canadian bond yields fall across a flatter curve

By Fergal Smith

TORONTO, Sept 10 (Reuters) - The Canadian dollar lost ground against its U.S. counterpart on Thursday as equity markets turned lower and Bank of Canada Governor Tiff Macklem said it would take recent strengthening of the currency into consideration when deciding on policy.

U.S. stocks fell in volatile trading as heavyweight tech-related stocks slipped after a sharp rebound in the previous session, while elevated jobless claims underscored a patchy economic rebound. have flipped (lower for the Canadian dollar) in the afternoon as equities sold off," said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

Canada runs a current account deficit and is a major exporter of commodities, including oil, so the loonie tends to be sensitive to the global flow of trade and capital.

U.S. oil prices CLc1 declined nearly 2% after U.S. data showed a surprise build in crude stockpiles last week related in part to ongoing reductions at refineries along the Gulf of Mexico following Hurricane Laura. Canadian dollar CAD= was trading 0.4% lower at 1.3193 to the greenback, or 75.80 U.S. cents. The currency, which last week notched a near eight-month high at 1.2990, traded in a range of 1.3118 to 1.3202.

It is still too soon to start talking about an exit from monetary stimulus, said Macklem, adding that the central bank would take account of the currency's recent move higher against the U.S. dollar as it assesses the amount of stimulus needed in the economy. message that he is sending is that we're not going to let this run away," Anderson said.

Canadian government bond yields fell across a flatter curve in sympathy with U.S. Treasuries. The 10-year CA10YT=RR was down 3.2 basis points at 0.564%.

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