CANADA FX DEBT-C$ slides as lower crude prices weigh
(Updates with fresh comments from RBC, closing figures, additional details) * Canadian dollar at C$1.2281 or 81.43 U.S. cents * Bond prices mostly lower across the maturity curve By Solarina Ho TORONTO, April 21 (Reuters) - The Canadian dollar gave back about half a cent against the greenback on Tuesday, tracking lower oil prices after a Saudi Arabia-led coalition announced it was ending its military operation against Yemen. The price of crude, one of Canada's biggest exports, had risen some 15 percent this month on concerns that the civil war in Yemen, Saudi Arabia's southern neighbor, could destabilize the Middle East and reduce oil supplies. The Saudis said on Tuesday the bombing operation was over, and that it would now focus on security, counterterrorism, aid and finding a political solution for Yemen. The Canadian dollar finished at C$1.2281 to the greenback, or 81.43 U.S. cents, weaker than the Bank of Canada's official close of C$1.2230, or 81.77 U.S. cents, on Monday. Overall, the loonie held on to much of last week's gains, which came after the Bank of Canada offered a more optimistic economic outlook for the second half of the year that has dented expectations of another rate cut anytime soon. "The big themes remain the same: oil prices and the central bank dynamics," said Greg Moore, senior currency strategist at RBC Capital Markets. "On the whole, they suggest the Canadian dollar's appreciation last week was somewhat justified and we could potentially in the short term see more topside to the Canadian dollar before longer term weakness resumes." On the domestic front, Canada's Conservative government issued a federal budget that promised a modest surplus of C$1.4 billion, marking the first surplus in eight years. The value of Canadian wholesale trade unexpectedly fell by 0.4 percent in February to C$53.62 billion. Analysts had expected no change following January's 2.9 percent plunge. Canadian government bond prices were mostly lower across the maturity curve, with the two-year price down 1 Canadian cent to yield 0.646 percent and the benchmark 10-year falling 25 Canadian cents to yield 1.449 percent. The Canada-U.S. two-year bond spread was 12.6 basis points, while the 10-year spread was -46.2. (Reporting by Solarina Ho; Editing by Peter Galloway and Cynthia Osterman)
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