CANADA FX DEBT-C$ weakens as oil falls, risk appetite fades
(Adds analyst quote, updates prices) * Canadian dollar ends at C$1.2713, or 78.66 U.S. cents * Bond prices mixed across a flatter maturity curve * 10-year yield hits lowest since Feb. 29 at 1.149 percent By Fergal Smith TORONTO, June 9 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Thursday as oil prices moved lower and risk appetite waned. Losses for the loonie came one day after it strengthened to a five-week high at C$1.2655 as expectations dwindled that the U.S. Federal Reserve will move to hike interest rates again soon. "We think that the Canadian dollar - the strength that we have seen earlier this year and more recently - we think there is limited room for further strength," said Eric Viloria, a currency strategist at Wells Fargo. Firming economic growth, a recovery in commodities prices and the shift in expectations for monetary policy for both Canada and the United States will become less supportive factors for the currency, he added. Oil prices fell, snapping a three-day rally after notching another 2016 high, as a strong dollar sparked profit-taking in crude futures. U.S. crude prices settled 67 cents lower at $50.56 a barrel. Slippage in global stocks provided an additional headwind for the risk-sensitive commodity-linked Canadian dollar. U.S. stocks retreated after three straight days of gains. The Canadian dollar ended at C$1.2713 to the greenback, or 78.66 U.S. cents, slightly weaker than Wednesday's close of C$1.2696, or 78.76 U.S. cents. The currency's strongest level of the session was C$1.2670, while its weakest was C$1.2767. Canadian industries ran at 81.4 percent of capacity in the first quarter, up from 80.9 percent in the previous quarter and new home prices in Canada rose 0.3 percent in April from March, data from Statistics Canada showed. Canadian employment data for May will be released on Friday. The report comes after a massive wildfire last month cut production in Alberta's oil sands region. The Bank of Canada has said it expects damage from the wildfire to shave 1.25 percentage points off economic growth in the second quarter, which could put the quarter on pace for a contraction. Canadian government bond prices were mixed across a flatter curve, with the two-year price flat to yield 0.52 percent and the benchmark 10-year rising 16 Canadian cents to yield 1.184 percent. The 10-year yield hit its lowest since Feb. 29 at 1.149 percent. (Reporting by Fergal Smith, editing by G Crosse)
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