C$ weakens with oil but notches 2nd straight weekly gain
(Adds strategist quotes and details throughout; updates prices)
* Canadian dollar falls 0.2 percent against the greenback
* Loonie rises 0.8 percent for the week
* Price of U.S. oil falls 1.9 percent
* Canadian bond prices rise across a flatter yield curve
By Fergal Smith
TORONTO, Jan 11 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart on Friday as oil prices fell, but
the loonie still advanced for a second consecutive week after
the Bank of Canada said the challenges facing the economy were
The price of oil, one of Canada's major exports, fell on
worries about a global economic slowdown. U.S. crude oil futures
settled 1.9 percent lower at $51.59 a barrel.
Still, oil has rebounded about 22 percent since slumping in
December to an 18-month low.
"Oil is interesting; super volatile fourth quarter, nice
rebound thus far this year. It is still the hot factor," said
Greg Anderson, global head of foreign exchange strategy in New
York. "The CAD move (today) is almost tick for tick."
The three-month correlation between the Canadian dollar and
oil has climbed to about 90 percent, according to Refinitiv
Eikon data, indicating the currency and the commodity move
mostly in the same direction. For some months in 2018 the
correlation was negative.
At 2:51 p.m. (1951 GMT), the Canadian dollar was
trading 0.2 percent lower at 1.3265 to the greenback, or 75.39
The currency, which on Wednesday touched its strongest
intraday level in more than 5 weeks at 1.3180, traded in a range
of 1.3183 to 1.3275.
For the week the loonie was up 0.8 percent. The Bank of
Canada held interest rates steady as expected on Wednesday but
said more rate increases would be necessary even though low oil
prices and a weak housing market will harm the economy in the
The U.S. dollar edged higher against a basket of
major currencies despite recent cautious signals from the
Federal Reserve about further rate hikes.
Canadian government bond prices were higher across a flatter
yield curve in sympathy with U.S. Treasuries. The 10-year
rose 32 Canadian cents to yield 1.948 percent.
The gap between Canada's 2- and 10-year yields narrowed by
1.2 basis points to a spread of 5.9 basis points.
(Reporting by Fergal Smith; Editing by Jonathan Oatis and
First Published: 2019-01-11 16:58:49
Updated 2019-01-11 22:13:48
© 2019 Thomson Reuters. All rights reserved. Reuters content is the intellectual property of Thomson Reuters or its third party content providers. Any copying, republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters. Thomson Reuters shall not be liable for any errors or delays in content, or for any actions taken in reliance thereon. "Reuters" and the Reuters Logo are trademarks of Thomson Reuters and its affiliated companies.