CANADA FX DEBT-C$ weakens as oil dips, greenback rebounds
* Canadian dollar at C$1.3148, or 76.06 U.S. cents * Bond prices higher across the yield curve TORONTO, Jan 16 (Reuters) - The Canadian dollar weakened against its U.S. counterpart on Monday, paring some recent gains ahead of a Bank of Canada interest rate decision midweek as oil dipped and the greenback rebounded against a basket of major currencies. The U.S. dollar rose after suffering its worst week since November. It was hit last week by a lack of clarity over what U.S. President-elect Donald Trump, whose inauguration is on Friday, will do once he assumes office. Prices of oil, one of Canada's major exports, slipped amid doubts that large oil producers will reduce production as promised and on expectations that U.S. production would increase again this year. U.S. crude prices were down 0.10 percent at $52.32 a barrel. At 9:23 a.m. ET (1423 GMT), the Canadian dollar was trading at C$1.3148 to the greenback, or 76.06 U.S. cents, weaker than Friday's close of C$1.3126, or 76.18 U.S. cents. The currency's strongest level of the session was C$1.3102, while its weakest was C$1.3163. U.S. markets are closed on Monday for Martin Luther King Jr. Day, which will lower liquidity. Analysts expect the Bank of Canada to leave its policy rate on hold at 0.5 percent at Wednesday's announcement. As recently as October, the central bank said it had considered easing rates as it downgraded its economic outlook. But recent data showed a surge in jobs in December and the first trade surplus in more than two years in November, while a Bank of Canada survey last week pointed to improving business conditions. On Thursday, the loonie had touched a near 3-month high at C$1.3028. Speculators have raised bearish bets on the Canadian dollar. Net short Canadian dollar positions rose to 7,935 contracts as of Jan. 10 from 3,871 a week earlier, data from the Commodity Futures Trading Commission and Reuters calculations showed on Friday. Canadian government bond prices were higher across the yield curve as investors sought shelter in safe haven assets as uncertainty over Britain's departure from the European Union and the policies of Trump curbed appetite for risk. The two-year price rose 0.5 Canadian cent to yield 0.797 percent and the 10-year climbed 20 Canadian cents to yield 1.691 percent. (Reporting by Fergal Smith; Editing by Nick Zieminski)
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