CANADA FX DEBT-C$ slumps further to weakest in more than six years
(Updates with closing figures and settlements, strategist comment) * Canadian dollar at C$1.2997 or 76.94 U.S. cents * Bond prices were mixed across the maturity curve By Solarina Ho TORONTO, July 20 (Reuters) - The Canadian dollar finished just under C$1.30 against its U.S. counterpart on Monday hit by crude prices that dipped below $50 a barrel, a U.S. dollar that reached a three-month high against a basket of currencies, and Canadian wholesale trade figures showing a slump in May. There was little news to give the battered loonie a reprieve after last week's Bank of Canada rate cut that has pushed the currency to its weakest level against the greenback since March 2009. Wholesale trade fell by 1 percent in May, exceeding economists' forecasts for a flat reading. Sales were also down 1 percent in volume terms. The figures come after hefty gains in the previous two months. "Weakness on the back of the wholesale trade numbers shouldn't be surprising ... It suggests that May is going to be probably flat for GDP and probably some downside risks there," said Benjamin Reitzes, senior economist at BMO Capital Markets. "It's still a difficult environment for the Canadian dollar, and on top that oil is sub-50 bucks. And that's not good." The Canadian dollar, which was a mid-performer against other key currencies, finished at C$1.2997 to the U.S. dollar, or 76.94 U.S. cents, weaker than the Bank of Canada's official close of C$1.2987, or 77.00 U.S. cents on Friday. The loonie briefly slid to C$1.3025, its weakest level since March 2009. At that time, the currency had hit C$1.3066, which was the weakest level since 2004. Strategists expect the currency to weaken near C$1.33 or about 75 U.S. cents. "We're headed into uncharted territory. Well, it's charted, but a long, long ways back," said Reitzes. On the oil front, important for crude export-heavy Canada, the strong greenback, as well as signs of growing excess supply kept prices under pressure. U.S. August crude, set to expire on Tuesday, fell 74 cents to settle at $50.15 a barrel, having fallen to $49.85, its first time below $50 since April. Brent September crude fell 45 cents to settle at $56.65, having traded between $56.33 and $57.44. Canadian government bond prices were mixed across the maturity curve with longer-term bonds falling. The two-year price slipped 1.5 Canadian cents, to 0.432 percent and the benchmark 10-year fell 13 Canadian cents to yield 1.577 percent. The Canada-U.S. two-year bond spread widened to -27.8 basis points, while the 10-year spread widened to -80.3 basis points. (Reporting by Solarina Ho; Editing by W Simon and Lisa Shumaker)
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