CANADA FX DEBT-C$ extends retreat as crude prices fall

Mon Feb 23, 2015 10:14am EST
 
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* Canadian dollar at C$1.2582, or 79.48 U.S. cents
    * Bond prices higher across the maturity curve

    By Solarina Ho
    TORONTO, Feb 23 (Reuters) - The Canadian dollar weakened
against its U.S. counterpart for the fourth straight session on
Monday, hurt in large part by another slide in oil prices.
    Crude prices, which had more than halved between June and
January, retreated on worries of excess crude supply. U.S. crude
stocks, which are already at record highs, are expected to build
in the coming months. The pace of the U.S. rig count decline,
which helped provide some price support, also was slowing.
Canada is a major exporter of oil. 
    Earlier in the session, the currency's moves were also
driven in part by news that Canada's Valeant Pharmaceuticals
International Inc would acquire gastrointestinal
drugmaker Salix Pharmaceuticals Ltd in an all-cash deal
valued at about $10.1 billion. 
    "The market sees that there's a potential there of outflow
from Canada going into the U.S. I'm a bit more skeptical because
most of Valeant's activities are in U.S. dollars," said Charles
St-Arnaud, senior economist and strategist at Nomura Securities
in London.
    "The biggest driver has probably been the decline in oil so
far today."
    At 9:28 a.m. ET (1428 GMT), the Canadian dollar was
at C$1.2582 to the greenback, or 79.48 U.S. cents, down from
Friday's close of C$1.2546, or 79.71 U.S. cents.
    Looking ahead, investors will focus on a speech and press
conference by Bank of Canada Governor Stephen Poloz on Tuesday
for any guidance on whether the central bank will cut interest
rates again at its rate announcement next week. 
    The bank stunned markets in January with an unexpected rate
cut, and markets are currently pricing in an 81.7 percent chance
of another cut when it announces its decision on March 4.
    Investors will also be eying testimony by Federal Reserve
Chair Janet Yellen on Tuesday, where she will deliver the U.S.
central bank's semi-annual monetary policy report to U.S.
lawmakers. 
    Canadian government bond prices were higher across the
maturity curve, with the two-year up 2.5 Canadian
cents to yield 0.388 percent and the benchmark 10-year
 up 25 Canadian cents to yield 1.397 percent.

 (Reporting by Solarina Ho; Editing by Paul Simao)