April 16, 2018 / 2:00 PM / 7 months ago

CANADA FX DEBT-C$ gains as Trudeau moves to end pipeline crisis

    * Canadian dollar at C$1.2584, or 79.47 U.S. cents
    * Bond prices lower across a steeper yield curve
    * 10-year yield touches nearly four-week high at 2.292
percent

    TORONTO, April 16 (Reuters) - The Canadian dollar
strengthened against its U.S. counterpart on Monday after
Canadian Prime Minister Justin Trudeau moved the day before to
end an escalating crisis over a Kinder Morgan Canada Ltd
         oil pipeline.
    Trudeau, who attended an emergency summit on Sunday with the
premiers of Alberta and British Columbia, said Ottawa was
prepared to offer financial aid to ensure the project went
ahead.                 
    Failure to build the pipeline could weigh on the outlook for
Canadian crude oil, which tends to trade at a discount to U.S
crude. Oil is one of Canada's major exports.
    At 9:46 a.m. EDT (1346 GMT), the Canadian dollar         
was trading 0.2 percent higher at C$1.2584 to the greenback, or
79.47 U.S. cents. The currency traded in a range of C$1.2576 to
C$1.2623.
    Gains for the loonie came as the U.S. dollar broadly fell.
The greenback remained at lower levels against a basket of
currencies as U.S. retail sales in March rose following three
months of declines, but failed to dispel some traders' worries
about economic growth cooling.             
    On Wednesday, the loonie was at its strongest in more than
seven-weeks at C$1.2545. It has been boosted recently by a
three-year high for oil.
    But U.S. crude        prices were down 1.4 percent on Monday
at $66.42 a barrel after U.S. drilling activity rose and fears
waned about tensions in the Middle East following air strikes on
Syria over the weekend.             
    The Bank of Canada is expected to leave its benchmark
interest rate unchanged at 1.25 percent when it announces on
Wednesday its latest interest rate decision. Domestic inflation
data is due on Friday.
    Canadian government bond prices were lower across a steeper
yield curve in sympathy with U.S. Treasuries, as U.S. stocks
climbed. The two-year            fell 2 Canadian cents to yield
1.874 percent and the 10-year             declined 29 Canadian
cents to yield 2.278 percent.
    The 10-year yield touched its highest since March 21 at
2.292 percent.

 (Reporting by Fergal Smith
Editing by Nick Zieminski)
  
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