CANADA FX DEBT-C$ tracks oil prices higher ahead of central banker speech
* Canadian dollar at C$1.3109, or 76.28 U.S. cents * Bond prices lower across the yield curve TORONTO, Feb 9 (Reuters) - The Canadian dollar strengthened against its U.S. counterpart on Thursday as oil prices rose and ahead of a speech by Bank of Canada Deputy Governor Lawrence Schembri on inflation. U.S. crude prices were up 1.17 percent at $52.95 a barrel, supported by an unexpected draw in U.S. gasoline inventories. Oil is one of Canada's major exports. Investors will look to Schembri's speech for insight as to how the Bank of Canada has been interpreting its three new measures of core inflation. The central bank will release his prepared remarks at 11:20 a.m. ET (1620 GMT). At 9:11 a.m. ET (1411 GMT), the Canadian dollar was trading at C$1.3109 to the greenback, or 76.28 U.S. cents, stronger than Wednesday's close of C$1.3155, or 76.02 U.S. cents. The currency traded in a range of C$1.3105 to C$1.3167, having rebounded from its weakest in two weeks on Tuesday of C$1.3213. The recent move lower in U.S. Treasury yields has weighed on the greenback, limiting pressure on the Canadian dollar, said RBC Capital Markets in a research note. Investors are also wary that U.S. President Donald Trump may reiterate his opposition to a strong U.S. dollar at a meeting with Japanese Prime Minister Shinzo Abe on Friday. Trump has also said he plans to renegotiate the North American Free Trade Agreement, threatening Canada's economy. Canada sends the bulk of its exports to the United States. On Wednesday, Canada's foreign minister, Chrystia Freeland, said that Canada opposes the idea of the United States imposing new border tariffs and would respond to any such move. Canadian government bond prices were lower across the yield curve in sympathy with U.S. Treasuries as the number of Americans filing for unemployment benefits unexpectedly fell last week to near a 43-year low. The two-year fell 2.5 Canadian cents to yield 0.736 percent and the 10-year declined 25 Canadian cents to yield 1.649 percent. On Wednesday, the 10-year yield touched a two-month low at 1.607 percent. In domestic data, new home prices rose 0.1 percent in December from the previous month, Statistics Canada said. Canada's employment report for January is due on Friday. The job market is expected to be unchanged after 2016's strong second half. (Reporting by Fergal Smith Editing by W Simon)
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