CANADA FX DEBT-C$ drops to weakest close in more than a decade
(Updates throughout with details on intraday lows and closing levels, and strategist's comments) * Canadian dollar finishes at C$1.3037, or 76.70 U.S. cents * Weakest close since 2004 * Intraday low of C$1.3053, or 76.61 U.S. cents * Weakest intraday level since March 2009 * Bond prices mixed across the maturity curve By Solarina Ho TORONTO, July 22 (Reuters) - The Canadian dollar tested multiyear lows against the greenback on Wednesday, dropping to its weakest close in more than a decade as the U.S. dollar firmed and oil prices remained under pressure. The loonie took its cue from the U.S. dollar, which rebounded from its biggest fall in a month after data showed U.S. home resales rose to an 8-1/2-year peak. Prices for oil, a key Canadian export, failed to hold on to Tuesday's gains, with U.S. crude settling below the $50 a barrel mark at $49.19. The drop came after data showed U.S. crude inventories rose last week, while the stronger U.S. dollar added to the pressure. The Canadian dollar finished at C$1.3037, or 76.70 U.S. cents, sharply weaker than the Bank of Canada's official close of C$1.2948, or 77.23 U.S. cents on Tuesday, and the currency's weakest close since early September 2004. The loonie retreated as far as C$1.3053 against the U.S. dollar, or 76.61 U.S. cents, during the session, its weakest intraday level since March 9, 2009, when it hit C$1.3066, or 76.53 U.S. cents. "I would characterize it as testing the decade lows. Technically, that C$1.3065 level is fairly significant because it (was) reached during the financial crisis in 2008/09. To get above there, we probably do need to something significant," said Greg Moore, senior currency strategist at Royal Bank of Canada. "Nevertheless, we have moved fairly far today." Many market participants expect the loonie to weaken further against the U.S. dollar this year, particularly as the U.S. Federal Reserve prepares to resume raising interest rates, possibly in September, while Canadian rates are expected to stay low. "The clearest risk to me is the Fed meeting next week," said Moore. "If they really want to potentially hike in the fall this year, they're going to have to start signaling that next week." Looking ahead, Canadian retail sales figures for May are due at 8:30 a.m. EDT (1230 GMT) on Thursday. Economists are expecting an increase of 0.5 percent. Canadian government bond prices were mixed across the maturity curve, with the two-year price down 1.5 Canadian cents to yield 0.434 percent and the benchmark 10-year rising 17 Canadian cents to yield 1.544 percent. The Canada-U.S. two-year bond spread was -27.6 basis points, while the 10-year spread was -78.5 basis points. (Reporting by Solarina Ho; Editing by Peter Galloway)
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