CANADA FX DEBT-C$ weakens as oil falls, risk appetite deteriorates

Mon Jun 13, 2016 9:57am EDT
 
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* Canadian dollar at C$1.2813, or 78.05 U.S. cents
    * Bond prices higher across the maturity curve

    TORONTO, June 13 (Reuters) - The Canadian dollar weakened to
a nearly one-week low against its U.S. counterpart on Monday as
oil fell and risk appetite deteriorated amid fears that Britain
may be on the verge of voting to leave the European Union.
    Oil prices fell, weighed down by gloomy economic prospects
in Europe and Asia. U.S. crude prices were down 1.39
percent to $48.39 a barrel.  
    Global stocks sold off, adding to headwinds for the
risk-sensitive commodity-linked Canadian dollar, after betting
odds showed the probability that Britain would vote to leave the
EU had increased sharply to 36 percent, the highest level since
the June 23 referendum was announced four months ago.
 
    At 9:26 a.m. EDT (1326 GMT), the Canadian dollar 
was trading at C$1.2813 to the greenback, or 78.05 U.S. cents,
weaker than Friday's close of C$1.2757, or 78.39 U.S. cents.
    The currency's strongest level of the session was C$1.2764,
while it touched its weakest level since June 7 at C$1.2827.
    Last week, the loonie gained 1.4 percent as expectations
fell for interest rate hikes from the U.S. Federal Reserve and
as oil made fresh 2016 highs above $50 a barrel.
    In addition, data on Friday showed that Canada added far
more jobs than expected in May as hiring picked up in
construction and manufacturing. 
    Speculators have cut bullish bets on the loonie, Commodity
Futures Trading Commission data showed on Friday. Net long
Canadian dollar positions fell to 21,537 contracts in the week
ended June 7 from 26,259 contracts in the prior week, which was
the largest net long position since February 2013. 
    Canadian government bond prices were higher across the
maturity curve in sympathy with U.S. Treasuries. The two-year
 price rose 2 Canadian cents to yield 0.491 percent
and the benchmark 10-year climbed 11 Canadian cents
to yield 1.12 percent. The 10-year yield hit its lowest level
since Feb. 24 at 1.107 percent.

 (Reporting by Fergal Smith; Editing by Paul Simao)