CANADA FX DEBT-C$ buoyed by oil price rally
* Canadian dollar at C$1.2540 or 79.74 U.S. cents * Bond prices mostly lower across the maturity curve By Solarina Ho TORONTO, Feb 3 (Reuters) - The Canadian dollar was stronger against the greenback on Tuesday, bolstered in large part by U.S. oil prices trading above $50 a barrel. Crude prices extended gains after British oil company BP became the latest petroleum producer to reduce capital expenditures, adding to expectations that spending cuts will help trim output and deplete some of the excess supply that has driven crude prices down about 50 percent since June. Canada is a major crude exporter and its currency has tracked plummeting oil prices. But the loonie has rebounded in recent sessions from a nearly six-year low of C$1.28 against the greenback, or 78.13 U.S. cents, helped by a more than 13 percent rebound in oil prices. "Oil has been the catalyst that's got things moving ... but (investor) positioning is really exaggerating the moves," said Adam Cole, global head of FX strategy at RBC Capital Markets in London. "CAD throughout the course of January was by far worst performer in G10 space. We have in the past found that CAD - the commodities currencies - have a tendency to overshoot in January." At 9:30 a.m. EST (1430 GMT), the Canadian dollar was at C$1.2540 to the greenback, or 79.74 U.S. cents, stronger than Monday's close of C$1.2577, or 79.51 U.S. cents. On the data front, investors were awaiting Canadian trade numbers for December as well as January employment figures for the United States and Canada later in the week for more insight into the health of the neighboring economies. Strategists still forecast further weakness in the Canadian dollar, with the Bank of Canada widely expected to cut interest rates again as early as next month. Canadian government bond prices were mostly lower across the maturity curve, with the two-year down 5.5 Canadian cents to yield 0.421 percent and the benchmark 10-year was 41 Canadian cents to yield 1.277 percent. (Reporting by Solarina Ho; Editing by Peter Galloway)
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