CANADA FX DEBT-C$ weakens against firmer greenback as oil falls

Wed Aug 24, 2016 9:22am EDT
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* Canadian dollar at C$1.2942, or 77.27 U.S. cents
    * Bond prices mixed across the maturity curve

    TORONTO, Aug 24 (Reuters) - The commodity-linked Canadian
dollar weakened against a firmer U.S. counterpart on Wednesday
as oil fell, although losses for the currency were restrained as
investors awaited clues this week on the U.S. interest rate
    Oil fell on an unexpected increase in U.S. crude stockpiles
that revived worries about the supply glut that has capped
prices for the past two years. U.S. crude prices were
down 1.54 percent to $47.36 a barrel. 
    The U.S. dollar rose against a basket of major
currencies ahead of a gathering of global central bankers later
this week in Jackson Hole, Wyoming, where the focus will be on
Friday's keynote speech by Federal Reserve Chair Janet Yellen.
    At 9:07 a.m. EDT (1307 GMT), the Canadian dollar 
was trading at C$1.2942 to the greenback, or 77.27 U.S. cents,
weaker than Tuesday's close of C$1.2910, or 77.46 U.S. cents.
    The currency's strongest level of the session was C$1.2902,
while its weakest was C$1.2953.
    On Monday, the loonie touched its weakest in one week at
    The Alberta government raised its 2016-17 budget deficit
forecast to C$10.9 billion on Tuesday, largely because of a
massive wildfire that ripped through the province's oil sands
hub of Fort McMurray in May. 
    The wildfire is expected to weigh on Canada's second-quarter
growth. The Bank of Canada projected in July that the economy
will contract 1 percent annualized before rebounding 3.5 percent
in the third quarter.
    Canadian government bond prices were mixed across the
maturity curve, with the two-year bond down 0.5
Canadian cent to yield 0.560 percent and the benchmark 10-year
 rising 3 Canadian cents to yield 1.020 percent.
    The curve flattened as the spread between the 2-year and
10-year yields narrowed by 0.6 of a basis point to 46 basis
points, its narrowest since June 2008, indicating outperformance
for longer-dated maturities.

 (Reporting by Fergal Smith; Editing by Nick Zieminski)