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CANADA FX DEBT-C$ weakens on global growth worries; Ontario downgraded

Published 2018-12-14, 10:39 a/m
© Reuters.  CANADA FX DEBT-C$ weakens on global growth worries; Ontario downgraded
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* Canadian dollar falls 0.2 percent against the greenback

* Loonie is on track to fall 0.4 percent for the week

* Canadian bond prices rise across the yield curve

* Ontario-Quebec 10-year spread hits widest since June

TORONTO, Dec 14 (Reuters) - The Canadian dollar lost ground against its broadly stronger U.S. counterpart on Friday as investors worried about signs of slower global growth and after the debt rating of Canada's most populous province was downgraded by Moody's.

At 10:24 a.m. (1524 GMT), the Canadian dollar CAD=D4 was trading 0.2 percent lower at 1.3378 to the greenback, or 74.75 U.S. cents.

The currency traded in a range of 1.3346 to 1.3402. It was on track to fall 0.4 percent for the week.

Stocks and the price of oil, one of Canada's major exports, fell as weak economic data from China and Europe exacerbated global growth fears and added to unease over the trade dispute between the United States and China. crude CLc1 prices were down 1.8 percent at $51.66 a barrel.

In contrast, solid U.S. store sales in November supported the notion the world's largest economy is expanding at a steady clip, boosting the greenback .DXY against a basket of major currencies. rating agency Moody's downgraded the issuer and long-term debt rating of Ontario, Canada's industrial heartland, to Aa3 from Aa2 due to the fiscal challenges facing the province over the medium-term. month, the province's new Conservative government said it will run a budget deficit of C$14.5 billion in 2018-19, its widest in seven years. has one of the largest sub-sovereign debts in the world. The additional yield it pays to borrow over 10 years compared to Quebec widened by 0.5 basis points to 5.5 basis points, the widest spread since June 7.

In Canadian data, the ratio of household debt-to-income widened to 173.8 percent in the third quarter, to hold near a record high, from an upwardly revised 173.2 percent in the second quarter, data from Statistics Canada showed. government bond prices were higher across the yield curve, with the 10-year CA10YT=RR rising 37 Canadian cents to yield 2.115 percent.

The gap between Canada's 10-year yield and its U.S. equivalent widened by 3.1 basis points to a spread of 78.4 basis points in favor of the U.S. bond.

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