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CANADA FX DEBT-Canadian dollar keeps to narrow range as oil rally fades

Published 2019-10-07, 04:25 p/m
© Reuters.  CANADA FX DEBT-Canadian dollar keeps to narrow range as oil rally fades
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(Adds strategist quotes and details throughout; updates prices)

* Canadian dollar trades near flat against the greenback

* Loonie trades in a range of 1.3291 to 1.3331

* Price of U.S. oil dips 0.1%

* Canada's 10-year yield touches a one-month low at 1.226%

By Fergal Smith

TORONTO, Oct 7 (Reuters) - The Canadian dollar was little changed against its U.S. counterpart on Monday, sticking to a narrow range as oil prices fluctuated and trade talks loomed this week between the United States and China.

U.S. stocks dipped after a report that Beijing was increasingly reluctant to agree to a broad trade deal pursued by President Donald Trump weighed on sentiment. market participants are waiting for Thursday when trade negotiations resume, but I think also traders are a little bit tired of these headlines," said Erik Bregar, head of FX strategy at the Exchange Bank of Canada.

"It's a bit of a range trade here. I think the little bit of volatility we saw in oil today was probably more of a factor," Bregar said.

The price of oil, one of Canada's major exports, gave up its earlier gains as hopes of a comprehensive U.S.-China trade deal faded and a new poll showed analysts expected U.S. oil crude inventories to have risen last week. U.S. crude oil futures CLc1 settled 0.1% lower at $52.75 a barrel.

At 3:53 p.m. (1953 GMT), the Canadian dollar CAD=D4 was trading nearly unchanged at 1.3308 to the greenback, or 75.14 U.S. cents. The currency, which weakened 0.4% last week, traded in a range of 1.3291 to 1.3331.

Canada's employment report for September is due on Friday. A robust domestic jobs market this year has supported the Bank of Canada's decision to leave interest rates on hold even as some of its global peers, including the U.S. Federal Reserve and the European Central Bank, have eased.

The Canadian dollar will gain ground against its U.S. counterpart over the coming year, supported by a strengthening of the domestic economy and a narrower gap between Canadian and U.S. interest rates, a Reuters poll predicted. government bond prices were lower across the yield curve in sympathy with U.S. Treasuries on Monday. The two-year CA2YT=RR fell 7 Canadian cents to yield 1.452% and the 10-year CA10YT=RR was down 50 Canadian cents to yield 1.287%.

Earlier in the day, the 10-year yield touched its lowest intraday level since Sept. 5 at 1.226%.

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