June 7, 2017 / 9:03 PM / in 2 months

CANADA FX DEBT-C$ weakens as oil prices sink, triple event on Thursday in focus

    * Canadian dollar at C$1.3512, or 74.01 U.S. cents
    * Loonie touches its strongest since May 29 at C$1.3427
    * Longer term bond prices lower across yield curve

    TORONTO, June 7 (Reuters) - The Canadian dollar weakened on
Wednesday against its U.S. counterpart as oil prices tumbled and
investors braced for a trio of major events on Thursday.
    Prices of oil, one of Canada's major exports, fell sharply
after the U.S. government reported an unexpected rise in crude
and gasoline inventories, which added to concerns that efforts
to cut output by the world's biggest oil producers have not made
enough impact.             
    U.S. crude        prices were down 5.1 percent to $45.74 a
barrel, while Brent crude         lost 4.0 percent to
$48.11.     
    "Lower crude prices are impacting Canada's potential terms
of trade ... and lowering the likelihood of a big bump in capex
investment in the energy complex in Canada over the coming six
to 12 months," said Karl Schamotta, director global markets
strategy at Cambridge Global Payments.
    "This is turning investors slightly bearish on Canada's
prospects, particularly considering that we have softness
percolating across the real estate markets here."
    At 4:00 p.m. ET (2000 GMT), the Canadian dollar          was
trading at C$1.3512 to the greenback, or 74.01 U.S. cents, down
0.4 percent.
    The currency's weakest level of the session was C$1.3525,
while it touched its strongest since May 29 at C$1.3427.
    The loonie hit a one-week high earlier in the session as the
Organisation for Economic Cooperation and Development forecast
that Canada's economy will grow 2.8 percent this year after a
1.4 percent expansion in 2016.             
    "At the same time, traders are generally nervous about the
triple threat that we have coming tomorrow," said Schamotta.
    The three key events that could drive market direction are a
European Central Bank meeting, a parliamentary election in the
UK and testimony by former U.S. FBI Director James Comey to a
Senate committee on Thursday.
    The Bank of Canada's review of developments in the financial
system is also due on Thursday, followed by a news conference
with Governor Stephen Poloz. Investors will weigh Poloz's
assessment of the housing and mortgage markets in light of
recent troubles at non-bank lender Home Capital.
    The price of longer term Canadian government bonds were
mostly lower across the yield curve. The two-year           
price dipped half a Canadian cent to yield 0.715 percent and the
10-year             declined 14 Canadian cents to yield 1.410
percent.
    Canada's employment report for May is due on Friday.

    
 (Reporting by Fergal Smith; Additional reporting by Solarina
Ho; Editing by Nick Zieminski and Diane Craft)
  
 

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