CANADA FX DEBT-C$ weakens to 6-day low as commodity currencies retreat

Tue Jul 19, 2016 10:03am EDT
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* Canadian dollar at C$1.3025, or 76.78 U.S. cents
    * Loonie hits its weakest since July 13 at C$1.3053
    * Bond prices slightly higher across the maturity curve
    * 10-year yield touches its highest since June 27 at 1.150

    TORONTO, July 19 (Reuters) - The Canadian dollar weakened to
a nearly one-week low against its U.S. counterpart on Tuesday,
tracking losses for fellow commodity currencies as oil prices
fell and recent improvement in risk appetite stalled.
    World shares dipped for only the second time in nine days,
sapped by a drop in oil prices and data that showed Britain's
vote to quit the European Union has done serious damage to
German economic confidence. 
    U.S. crude prices were down 0.44 percent to $45.04 a
barrel amid concerns over a global supply glut. 
    The commodity-linked Australian and New Zealand dollars fell
as investors ramped up bets that central banks in Australia and
New Zealand could ease monetary policy as early as next month.
    At 9:33 a.m. EDT (1333 GMT), the risk-sensitive Canadian
dollar was trading at C$1.3025 to the greenback, or
76.78 U.S. cents, weaker than Monday's close of C$1.2937, or
77.30 U.S. cents.
    The currency's strongest level of the session was C$1.2940,
while it hit its weakest since July 13 at C$1.3053.
    Last week, the loonie rose 0.8 percent as a somewhat
optimistic update from the Bank of Canada lowered expectations
for an interest rate cut.    
    The implied probability of a rate cut this year has fallen
below 10 percent, overnight index swaps data showed. It had been
above 30 percent in the week following the British referendum
vote on June 23 to leave the European Union. 
    Canadian government bond prices were slightly higher across
the maturity curve, with the two-year price up 0.5
Canadian cent to yield 0.577 percent and the benchmark 10-year
 rising 7 Canadian cents to yield 1.092 percent.
    Earlier in the session the 10-year yield touched its highest
since June 27 at 1.150 percent, extending its rebound from a
five-month low on July 11 at 0.935 percent.
    Canadian retail sales data for May and inflation data for
June are due on Friday.

 (Reporting by Fergal Smith; Editing by Meredith Mazzilli)