CANADA FX DEBT-C$ hits 1-week low as oil falls on Brexit risk
* Canadian dollar ended at C$1.2926, or 77.36 U.S. cents * The loonie touched its weakest since June 6 at C$1.2943 * Bond prices higher across the maturity curve By Fergal Smith TORONTO, June 15 (Reuters) - The Canadian dollar weakened to a new one-week low against its U.S. counterpart on Wednesday as oil prices fell, but losses were limited by reduced bets for U.S. interest rate hikes and stronger-than-expected domestic manufacturing data. Oil fell for the fifth straight session on mounting concerns about Britain's possible exit from the European Union. A referendum on the so-called Brexit will be held on June 23. U.S. crude prices settled down 48 cents at $48.01 a barrel. "To the extent that Brexit leads to severe financial market gyrations and global risk aversion, near-term prospects for the U.S. and global economies would be dimmed," said Derek Burleton, deputy chief economist at Toronto-Dominion Bank. In that scenario, the Canadian dollar would likely fall in tandem with commodity prices, he added. The Canadian dollar closed at C$1.2926 to the greenback, or 77.36 U.S. cents, weaker than Tuesday's close of C$1.2853, or 77.80 U.S. cents. The currency's strongest level of the session was C$1.2827. It traded as low as C$1.2943 for the first time since June 6. The U.S. Federal Reserve on Wednesday signaled that it still planned two rate increases this year, but indicated it would be less aggressive in tightening monetary policy after the year ends. The CME Group's FedWatch tool showed a 9.5 percent probability of a rate hike in July compared with 21 percent before the Fed ended its two-day policy meeting on Wednesday. Canadian factory sales rebounded in April, rising by a higher-than-expected 1.0 percent from March, after declining for two consecutive months. Sales of existing Canadian homes fell 2.8 percent in May from a record high in April, while borrowing activity by Canadian small businesses fell for the fifth consecutive month in April. Canadian government bond prices rose across the maturity curve in sympathy with Treasuries. The two-year price rose 3.5 Canadian cents to yield 0.478 percent and the benchmark 10-year climbed 34 Canadian cents to yield 1.083 percent. The Canada-U.S. two-year bond spread moved by 3.2 basis points to -19.3 basis points, its smallest gap since May 12, as Treasuries outperformed. Bank of Canada Governor Stephen Poloz will give a speech titled "The Canadian Economy: A Progress Report" on Wednesday night and then hold a press conference. His remarks will be published on the central bank's website at 7:40 p.m. EDT (2340 GMT). The Bank of Canada said last month the impact of the wildfires in Alberta could take 1.25 percentage points off growth in the second quarter. (Reporting by Fergal Smith; Editing by W Simon and Richard Chang)
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