CANADA FX DEBT-C$ hits 9-day low as greenback rally counters BoC rate hike By Reuters


© Reuters. CANADA FX DEBT-C$ hits 9-day low as greenback rally counters BoC rate hike

* Canadian dollar at C$1.3206, or 75.72 U.S. cents

* Bank of Canada hikes 25 basis points to 1.50 percent

* Price of U.S. oil falls 5.1 percent

* Bond prices lower across much of a flatter yield curve

By Fergal Smith

TORONTO, July 11 (Reuters) – The Canadian dollar weakened to a more than one-week low against its U.S. counterpart on Wednesday as broad-based gains for the greenback offset an interest rate hike by the Bank of Canada and the prospect of further monetary policy tightening.

The U.S. dollar rose as the market put aside trade tension fears and focused on an expectation-beating inflation report, which increased prospects that the Federal Reserve will raise U.S. interest rates another two times this year. U.S. dollar move offsets, and even more so, the somewhat hawkish BoC hike,” said Greg Anderson, global head of foreign exchange strategy at BMO Capital Markets in New York.

The Bank of Canada raised its benchmark interest rate by 25 basis points to 1.50 percent, the fourth hike since last summer.

It said mounting trade tensions with the United States would have a larger impact on investment and exports than previously thought but it nudged up its estimate for second-quarter economic growth and pointed to rising inflation pressures. should be consistent with a more firm pricing for another hike this year,” said Alvise Marino, FX strategist at Credit Suisse (SIX:) in New York.

Money markets see a nearly 70 percent chance of further Bank of Canada tightening by December.

At 2.11 p.m. EDT (1811 GMT), the Canadian dollar CAD=D4 was trading 0.7 percent lower at C$1.3206 to the greenback, or 75.72 U.S. cents.

The currency touched its strongest since June 14 at C$1.3064 and its weakest since July 2 at C$1.3209.

Losses for the came as the United States threatened tariffs on an additional $200 billion worth of Chinese goods, pressuring stocks and commodity prices. which has its own trade dispute with the United States, exports many commodities and runs a current account deficit so its economy could also be hurt if the flow of trade or capital slows.

U.S. crude oil futures fell more than 5 percent to $70.32 a barrel. O/R

Canadian government bond prices were mostly lower across a flatter yield curve, with the two-year down 4 Canadian cents to yield 1.959 percent and the 10-year falling 5 Canadian cents to yield 2.156 percent.

The gap between the 2-year yield and its U.S. equivalent narrowed by 2.7 basis points to a spread of -63.1 basis points.

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