CANADA FX DEBT-C$ sheds more than 1/2 cent as oil takes another drubbing

Mon Dec 15, 2014 5:06pm EST
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* Canadian dollar at C$1.1656 or 85.79 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, Dec 15 (Reuters) - The Canadian dollar fell through
C$1.16 to its weakest level against the U.S. dollar in 5-1/2
years on Monday as crude prices hit multiyear lows after OPEC
stayed resolute on its production stance.
    The Organization of the Petroleum Exporting Countries
reaffirmed on Sunday its intention not to cut output despite a
global fuel glut, while the United Arab Emirates said later
there was no need for an emergency OPEC meeting to fix prices.
    Canada is a major exporter of crude and the loonie's
fortunes have tracked those of the oil price since it started
dropping in June. The Canadian currency has fallen nearly 10
percent over a similar period to levels not seen since early
July 2009.
    "We're focusing all energy, pardon the pun, on crude. That's
really what's been moving the market," said Amo Sahota, director
at Klarity FX in San Francisco. "It does look as though it's
reaching some over-extension from a technical perspective, but
fundamentally, nothing's changed."
    The Canadian dollar ended Monday's session at
C$1.1656 to the greenback, or 85.79 U.S. cents, sharply lower
than Friday's finish of C$1.1572, or 86.42 U.S. cents. It was
its weakest close since July 8, 2009.
    "Last week, we saw Canada begin to post losses against some
of the other majors (currencies) and that was for the first time
in quite some time," said Brad Schruder, director, foreign
exchange sales, at BMO Capital Markets.
    "If you need to buy U.S. dollars you most certainly need to
err on the side of caution in these last couple of weeks of the
year because the storm is upon us."
    Schruder said it would not be surprising to see USD/CAD
hovering near C$1.20, but added that would likely be a story for
January, not December.
    All eyes will be on the U.S. Federal Reserve on Wednesday to
see how oil's retreat fits into the central bank's
    A slew of Canadian economic data, including inflation
figures for November on Friday, will also be in focus, but
Schruder said that given the influence of oil prices, the
figures will be heavily discounted by the market.
    Canadian government bond prices were mixed across the
maturity curve with shorter-term treasury bills higher and
longer-term bonds lower. The two-year edged down 2.5
Canadian cents to yield 0.976 percent and the benchmark 10-year
 fell 24 Canadian cents to yield 1.783 percent.

 (Reporting by Solarina Ho; Editing by Peter Galloway)