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CANADA FX DEBT-Canadian dollar hits near 1-week low as oil prices fall

Thu, 12th Sep 2019 21:22

(Adds strategist quote, background, updates prices)

* Canadian dollar falls 0.2% against the greenback

* Loonie hits a six-day low at 1.3221

* Canadian new home prices fall 0.1% in July

* Canada's 10-year yield touches a six-week high at 1.471%

By Fergal Smith

TORONTO, Sept 12 (Reuters) - The Canadian dollar weakened to a six-day low against its U.S. counterpart on Thursday as oil prices fell and investors grew skeptical about a potential thawing of trade tensions between the United States and China. At 4:01 p.m. (2001 GMT), the Canadian dollar was trading 0.2% lower at 1.3215 to the greenback, or 75.67 U.S. cents. The currency touched its weakest intraday level since last Friday at 1.3221.

Lower oil prices and investor skepticism about a U.S-China trade deal have "hammered" the loonie, said Alfonso Esparza, a senior currency analyst at OANDA.

Oil prices fell after a media report cast doubt on the possibility of an interim U.S.-China trade deal and as a meeting of the OPEC+ alliance yielded no decision on deepening crude supply cuts. U.S. crude oil futures settled 1.2% lower at $55.09 a barrel, extending this week's decline.

The Bank of Canada worried last week, even as it left its benchmark interest rate on hold at 1.75%, that the U.S.-China trade conflict has weighed more heavily than it previously thought on global economic momentum.

Meanwhile, data from Statistics Canada on Thursday showed that new home prices fell 0.1% in July. Prices have been flat or falling since August 2018.

Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries and German Bunds, after the European Central Bank launched new stimulus but failed to live up to some dovish market expectations.

    The two-year            fell 2.5 Canadian cents to yield
1.603% and the 10-year             was down 23 Canadian cents to
yield 1.45%. The 10-year yield posted its highest intraday level
since Aug. 1 at 1.471%. (Reporting by Fergal Smith Editing by Nick Zieminski and Richard Chang)

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