CANADA FX DEBT-C$ retreats to 1-1/2 month lows on US$ rally

Wed Mar 11, 2015 9:58am EDT
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* Canadian dollar at C$1.2706, or 78.70 U.S. cents
    * Bond prices mostly lower across the maturity curve

    By Solarina Ho
    TORONTO, March 11 (Reuters) - The Canadian dollar was
marginally weaker against its U.S. counterpart on Wednesday,
holding around levels not seen in nearly six weeks as a rallying
greenback and diverging central bank policies kept the currency
under pressure.
    Brent crude prices, while slightly higher, were still below
$57 a barrel as global supplies remained robust. The Bank of
Canada had assumed a $60 price when it said it would not cut
interest rates again if growth was at or above 1.5 percent in
the first half of the year. 
    "There's been a deviation between Brent crude oil and $60,
and that's an important input for the Bank of Canada," said Jack
Spitz, managing director of foreign exchange at National Bank
    However, he added: "The overwhelming dominance of the U.S.
dollar across the board on the inference that the Fed is going
to raise rates either in June or September is really the
motivating and directional price influence."
    The Canadian dollar was at C$1.2706 to the U.S.
dollar, or 78.70 U.S. cents at about 9:32 a.m. (1432 GMT),
weaker than Tuesday's close of C$1.2680, or 78.86 U.S. cents.
    Spitz said Friday's Canadian employment data for February,
already forecast to show a 5,000-job decline, could send the
Canadian dollar past C$1.28 hit at the end of January, its
weakest level in six years.
    "We could be targeting C$1.30 by the end of the week," he
said, adding that guidance in next week's Fed rate announcement
could also add further momentum to the U.S. dollar bid.
    Canadian government bond prices were mostly lower across the
maturity curve, with the two-year down 1 Canadian
cent to yield 0.594 percent and the benchmark 10-year
 off 7 Canadian cents to yield 1.541 percent.

 (Reporting by Solarina Ho; Editing by Lisa Von Ahn)