CANADA FX DEBT-C$ knocked by cheap oil, Bank of Canada

Wed Feb 11, 2015 9:45am EST
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* Canadian dollar at C$1.2637 or 79.13 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Feb 11 (Reuters) - The Canadian dollar extended its
previous session's losses against the U.S. dollar on Wednesday,
as softer crude prices and a dovish Bank of Canada remained the
driving themes behind the currency's weakness.
    Expectations that an oversupply of global crude stocks would
continue, along with a report by the American Petroleum
Institute that showed U.S. crude stocks rose to another record
high, kept oil prices under pressure. U.S. prices were down 76
cents by about 9:15 am ET (1415 GMT). 
    Remarks by the Bank of Canada's Senior Deputy Governor
Carolyn Wilkins, the first since the central bank confounded
markets with a 25 basis point interest rate cut last month, also
contributed to the currency's retreat. The Canadian economy was
still operating below its potential, Wilkins said in a speech on
    The loonie has fallen more than 8 percent so far this year,
touching levels not seen in nearly six years as diverging
monetary policies between the Bank of Canada and the U.S.
Federal Reserve and low oil prices continue to hurt the
crude-exporting country.
    "Since last week, where we had the move down towards C$1.23,
it's basically been one-way since then, with the Canadian dollar
weakening. We've had some negative, dovish comments from the
Bank of Canada yesterday," said David Bradley, director of
foreign exchange trading at Scotiabank.
    "It's a pretty light weak for data ... so the currency's at
the beck and call of what the broader U.S. dollar is doing to
some extent as well."
    At 9:24 a.m. ET (1424 GMT), the Canadian dollar was
at C$1.2637 to the U.S. dollar, or 79.13 U.S. cents, softer than
Tuesday's finish at C$1.2574, or 79.53 U.S. cents. 
    Bradley said markets are still buying USD/CAD on dips, but
noted that liquidity was also an issue, creating more volatility
as well.
    Canadian government bond prices were higher across the
maturity curve, with the two-year adding 4 Canadian
cents to yield 0.406 percent and the benchmark 10-year
 rising 19 Canadian cents to yield 1.407 percent.

 (Reporting by Solarina Ho; Editing by Meredith Mazzilli)