CANADA FX DEBT-Canadian dollar lifted by oil rally, weaker US$

Tue May 12, 2015 5:01pm EDT
 
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(Adds updated prices, comment from strategist, details)
    * Canadian dollar at C$1.2018 or 83.21 U.S. cents
    * Bond prices mixed across the maturity curve

    By Solarina Ho
    TORONTO, May 12 (Reuters) - Higher crude prices helped the
Canadian dollar strengthen against a broadly weaker U.S. dollar
on Tuesday, but trading stayed within its recent band due to a
dearth of domestic economic data to inspire moves.
    The weaker greenback, ongoing conflict in Yemen, and a
forecast by the Organization of the Petroleum Exporting
Countries for marginally higher growth in 2015 in world oil
demand all helped pushed the price of oil, a key Canadian
export, higher. 
    U.S. crude rose 3 percent $61.04, while Brent crude
 was up 3.3 percent at $67.09.
    "Today's strength in the Canadian dollar, part of it is from
West Texas (oil price) getting a bit above $60 again," said Amo
Sahota, director at Klarity FX in San Francisco, adding that
global macro themes were also affecting markets.
    U.S. and German government bonds sold off, and drove yields
for benchmark 10-year U.S. Treasuries to their highest since
mid-November, with German 10-year yields rising even more
strongly. 
    The Canadian dollar was at C$1.2018 to the
greenback, or 83.21 U.S. cents, stronger than the Bank of
Canada's official close of C$1.2110, or 82.58 U.S. cents, on
Monday. It traded between C$1.1979 and C$1.2107 during the
session.
    Sahota said the Canadian dollar could make further gains
before the greenback resumes its climb on expectations the
Federal Reserve will hike interest rates sometime this year.
    The Canadian economic calendar remains lean this week, but
U.S. data due on Wednesday, including retail-sales and
crude-inventory figures, should provide stimulus.
    "They're important data points; they're going to tell us
something about growth in the U.S., about oil inventory, and
business sentiment," Sahota said.
    Canadian government bond prices were higher across the
maturity curve. The two-year price was up 2 Canadian
cents to yield 0.697 percent and the benchmark 10-year
 is up 19 Canadian cents to yield 1.801.
    The Canada-U.S. two-year bond spread was 9.7 basis points,
while the 10-year spread was -45.7 basis points.

 (Reporting by Solarina Ho; Editing by Peter Galloway)