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CANADA FX DEBT-C$ hits new 14-month low as stops triggered

Published 2017-05-02, 09:34 a/m
© Reuters.  CANADA FX DEBT-C$ hits new 14-month low as stops triggered
USD/CAD
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CA2YT=RR
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* Canadian dollar at C$1.3709, or 72.94 U.S. cents

* Bond prices little changed across the yield curve

By Fergal Smith

TORONTO, May 2 (Reuters) - The Canadian dollar weakened on Tuesday to a fresh 14-month low against its U.S. counterpart as stop loss orders were triggered, extending recent pressure on the currency amid a more uncertain trade outlook and lower oil prices.

"This is simply a move to try and wipe out stops ahead of the day really getting rolling," said Brad Schruder, director of corporate sales and structuring at BMO Capital Markets.

"This is a lay up trade right now to sell Canada almost across the board."

The pullback in oil prices below $50 a barrel, domestic mortgage market concerns and an uncertain outlook for the North American Free Trade agreement have weighed on the loonie recently, while the market is also bracing for a Federal Reserve interest rate decision on Wednesday.

The U.S. Federal Reserve is expected to hold interest rates steady at its meeting this week as it pauses to parse more economic data but may hint it is on track for an increase in June. contrast, the Bank of Canada has signaled it is in no hurry to raise interest rates.

U.S. crude CLc1 prices were down 0.10 percent at $48.79 a barrel despite news of lower production by Russia and Organization of the Petroleum Exporting Countries. is one of Canada's major exports.

At 9:20 a.m. ET (1320 GMT), the Canadian dollar CAD=D4 was trading at C$1.3709 to the greenback, or 72.94 U.S. cents, weaker than Monday's close of C$1.3681, or 73.09 U.S. cents, according to Reuters data.

The currency's strongest level of the session was C$1.3651, while it touched its weakest since February 2016 at C$1.3712.

Strong commodity prices mean the value of Canadian goods exports will jump 6 percent in 2017 after a drop last year, Canada's export credit agency said, playing down possible disruption to NAFTA. government bond prices were little changed across the yield curve. The two-year CA2YT=RR edged up 1 Canadian cent to yield 0.715 percent, while the 10-year CA10YT=RR also rose 1 Canadian cent to yield 1.576 percent.

The spread between the 2-year yield and the 10-year yields widened by 0.4 of a basis point to 86.1 basis points, its widest since March 31.

Canada's trade report for March is due on Thursday, and the April employment report is due on Friday.

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