C$ weakens to new 11-year low as oil slides

Fri Dec 11, 2015 9:30am EST
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TORONTO (Reuters) - The Canadian dollar weakened to a fresh 11-year low against the U.S. dollar on Friday as crude oil prices slid further, while U.S. data left the door open to a Federal Reserve rate hike next week.

Crude oil prices hit new seven-year lows as the International Energy Agency (IEA) warned global oversupply could worsen in the new year.

U.S. crude CLc1 prices were down 1.44 percent to $36.23 a barrel, while Brent crude LCOc1 lost 1.59 percent to $39.10.

World stocks were on the brink of a two-month low as beaten-down oil prices contributed to negative sentiment, while U.S. Treasuries, seen as a safe haven, rallied.

A solid rise in U.S. core retail sales suggested enough momentum in the economy for the Fed to raise interest rates next week for the first time in nearly a decade.

At 9:00 a.m. ET, the Canadian dollar CAD=D4 was trading at C$1.3672 to the greenback, or 73.14 U.S. cents, weaker than Thursday's close of C$1.3632, or 73.36 U.S. cents.

The currency's strongest level of the session was C$1.3625, while at its low it hit its weakest since June 2004 at C$1.3679.

Canadian government bond prices were higher across the maturity curve, with the two-year CA2YT=RR price up 4 Canadian cents to yield 0.524 percent and the benchmark 10-year CA10YT=RR rising 21 Canadian cents to yield 1.464 percent.

The Canada-U.S. two-year bond spread was 0.8 of a basis point wider at -41.1 basis points, while the 10-year spread was 1.4 basis points narrower at -73.7 basis points as Treasuries outperformed at the long end of the curve.   Continued...

A Canadian dollar coin, commonly known as the "Loonie", is pictured in this illustration picture taken in Toronto January 23, 2015. REUTERS/Mark Blinch