CANADA FX DEBT-C$ pulls back from 2-1/2-month low

Thu Jul 2, 2015 9:46am EDT
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* Canadian dollar at C$1.2575 or 79.52 U.S. cents
    * Bond prices mixed across the maturity curve

    OTTAWA, July 2 (Reuters) - The Canadian dollar touched a
2-1/2-month low against the greenback on Thursday before clawing
back some gains as the currency continued to be dogged by
uncertainty over the Greek crisis and reduced expectations for
the Canadian economy.
    * Investors remained on watch about Greece's fate a day
after the country's prime minister urged Greeks to reject an
international bailout deal in a referendum this weekend. Greece
defaulted on its debt to the International Monetary Fund earlier
this week. 
    * The loonie has shed about 2 percent since last Friday,
initially weighed down by concerns over Greece, with the drop
then exacerbated by disappointing Canadian economic data and by
a decline in oil prices. 
    * Economists say figures that showed a decline in Canadian
economic growth at the start of the second quarter increase the
odds that the Bank of Canada will cut interest rates again by
the end of the year after opting for a quarter-point cut in
      Although markets are still pricing in about a 64 percent
chance that the bank will hold its benchmark rate at 0.75
percent in its next policy announcement later this month, that
is down from about a 70 percent likelihood at the start of the
    * At 9:14 a.m. EDT (1314 GMT), the Canadian dollar 
was trading at C$1.2575 to the greenback, or 79.52 U.S. cents,
modestly stronger than the previous session's close of C$1.2589,
or 79.43 U.S. cents, according to Reuters data. Canadian markets
were closed on Wednesday for Canada Day.
    * Thursday's level was weaker than the Bank of Canada's
official Tuesday close of C$1.2490, or 80.06 U.S. cents.
Although many traders were away from their desks on Wednesday,
the loonie shed 0.7 percent as the currency fell alongside the
price of oil, a major Canadian export.
    * The currency's strongest level of the early Thursday
session was C$1.2559, while its weakest level was C$1.2632, its
lowest level since April 13.
    * Investors were taking in economic data from south of the
border that showed the U.S. economy added 223,000 jobs in June,
slightly fewer than economists' expectations for a gain of
230,000. Canada's June job report will be released next
    * Canadian government bond prices were mixed across the
maturity curve, with the two-year price up 4 Canadian
cents to yield 0.461 percent and the benchmark 10-year
 falling 15 Canadian cents to yield 1.702 percent.
    * The Canada-U.S. two-year bond spread was -18.5 basis
points, while the 10-year spread was -67.4 basis points.

 (Reporting by Leah Schnurr; Editing by Peter Galloway)