CANADA FX DEBT-C$ hits 1-week low on concern trade deal will bypass Canada By Reuters


© Reuters. CANADA FX DEBT-C$ hits 1-week low on concern trade deal will bypass Canada

* Canadian dollar weakens 0.5 percent against the greenback

* touches a one-week low at 1.3026 to the greenback

* Price of U.S. oil falls nearly 1 percent

* Canadian bond prices move higher across flatter yield curve

By Fergal Smith

TORONTO, Sept 26 (Reuters) – The Canadian dollar weakened to its lowest in more than a week against the greenback on Wednesday, as the Federal Reserve hiked interest rates and investors worried that Canada would be left out of a trade deal with its NAFTA counterparts.

Canadian Prime Minister Justin Trudeau shrugged off U.S. pressure to quickly agree to a deal on the North American Free Trade Agreement (NAFTA) and indicated it was possible the three member nations might fail to conclude a new pact. Trump administration official said the text of a side deal the United States has reached with Mexico was set to be published on Friday.

“The United States moving ahead without Canada shows that Canada may be left out altogether,” said Adam Button, a currency analyst at ForexLive.

“I believe that it is still a remote possibility, but it is slightly higher than it was before this, and that’s why the Canadian dollar slumped.”

As the month-end deadline for the trade talks nears, Canadian executives who hedge foreign exchange risk have been changing their strategies so their companies can profit from any possible swings in the Canadian dollar. U.S. dollar rose against a basket of major currencies after the Fed raised interest rates as expected for the eighth time, flagged more rate hikes and signaled the end of the “accommodative” policy era. 4:09 p.m. (2009 GMT), the Canadian dollar CAD=D4 was trading 0.5 percent lower at 1.3018 to the greenback, or 76.82 U.S. cents. The currency touched its weakest level since Sept. 18 at 1.3026.

The price of oil, one of Canada’s major exports, eased after U.S. data showed a surprise build in domestic crude inventories. U.S. crude oil futures settled nearly 1 percent lower at $71.57 a barrel. government bond prices were higher across a flatter yield curve in sympathy with U.S. Treasuries. The 10-year climbed 36 Canadian cents to yield 2.417 percent.

On Tuesday, the 10-year yield touched its highest intraday in more than four months at 2.472 percent.

Bank of Canada Governor Stephen Poloz is due to speak on Thursday, while Canadian gross domestic product data for July is due on Friday.

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